Stock futures pointed higher Sunday evening as news of a potential U.S.-Iran peace deal fueled optimism across markets. Dow Jones, S&P 500, and Nasdaq futures all ticked up following reports that the two nations had reached an agreement to end hostilities and reopen the strategic Strait of Hormuz, a critical chokepoint for global energy shipments.
Oil prices tumbled sharply in response. Brent crude dropped $3.51, or 4.02%, to settle at $83.82 a barrel, while U.S. West Texas Intermediate fell $3.93, or 4.63%, to $80.95. The decline came as traders anticipated the resumption of normal energy flows through the strait, which had been disrupted by the conflict, easing supply concerns and inflation fears.
Former President Donald Trump announced the deal on Truth Social, stating, "The Deal with the Islamic Republic of Iran is now complete." Pakistan Prime Minister Shehbaz Sharif confirmed the agreement, with a formal signing planned for Friday in Switzerland, according to Reuters. Details remain scarce, but earlier proposals included reopening the Strait of Hormuz, lifting the U.S. naval blockade on Iranian ports, and a 60-day delay in nuclear talks.
In a separate development, SpaceX made headlines with a record-setting IPO. Shares of Elon Musk's aerospace company surged 19.2% in their Nasdaq debut, closing at $160.95, well above the $135 offering price. The IPO raised $75 billion, the largest on record, pushing SpaceX's market capitalization above $2 trillion. The strong debut overshadowed other space-related stocks, with Rocket Lab, Intuitive Machines, and Planet Labs all slipping after earlier gains.
Market participants remain cautious, however. "Today we're still waiting for proof of a deal," said Jake Dollarhide, CEO of Longbow Asset Management. He noted that much of the current excitement is centered on the SpaceX IPO, and that investors need to see a signed agreement with concrete details before fully pricing in the diplomatic breakthrough.
Adding to the week's significance, the Federal Reserve will hold its first policy meeting under Chair Kevin Warsh, concluding Wednesday. Most analysts expect the Federal Open Market Committee to keep interest rates unchanged. Traders will closely watch Warsh's commentary on inflation, particularly in light of falling oil prices, which could provide further relief if the U.S.-Iran deal holds.
The combination of geopolitical progress and a landmark IPO has injected fresh momentum into markets, but the coming days will test whether the optimism is sustainable. With the Fed meeting and further details on the Iran agreement pending, investors are bracing for potential volatility.
