Stock futures were staging an early comeback Monday after sharp declines on Friday.
As the conflict between Israel and Iran shows no signs of cooling, any recovery in stocks will likely be fragile. Over the weekend, Israel attacked command centers of Iran’s Revolutionary Guard and some oil facilities, and Iran’s retaliatory strikes early Monday killed four.
The problem for investors is trying to gauge how prolonged and serious the fighting will be. Further escalation, as well as the direct involvement of the U.S. in the fighting, could be bad for the market, but flare-ups have blown over relatively quickly in the past. While stocks were rising and the safe-haven asset gold pulled back from a record high, oil prices were continuing to rise.
There will be more important market-moving events this week. The Federal Reserve will announce its latest interest-rate decision on Wednesday. Traders are pricing in just a 3% chance of a cut, according to the CME Fedwatch tool. Chair Jerome Powell’s comments on the outlook for inflation may provide more insight into the Fed’s next moves.
There is also a meeting of the Group of Seven nations in Canada, which starts today. Investors may be hoping the summit will provide a platform for more trade deals to be announced as the grace period for President Donald Trump’s steep tariffs gets closer to expiring next month.
Futures for the Dow Jones Industrial Average added 176 points, or 0.4% before the market opened Monday. Contracts tied to the S&P 500 gained 0.5%, while those tracking the technology-heavy Nasdaq gained 0.6%.
Bitcoin, the biggest cryptocurrency that often trades in line with tech stocks, was rising 1.3%. The yield on the 10-year Treasury bond nudged up to 4.463%, extending Friday’s advances. That could be in part due to concerns about energy prices–crude futures rose 0.9% early Monday, extending Friday’s 7.3% gain, which was the biggest one-day jump since March 2022, just after Russia invaded Ukraine.
Gold, seen as a haven asset in times of turmoil, hit a record high Friday but was retreating to start the week. Futures contracts for the precious metal fell 0.5% to $3,435 an ounce.