Wall Street ended Friday with its best week in four months.
U.S. stock-index futures were little changed on Sunday, after new demands from Iran raised fresh doubts about the Strait of Hormuz reopening anytime soon and as investors await key inflation data later this week.
Dow Jones Industrial Average futures (YM00) fell about 110 points, or 0.2%, on Sunday, after the strongest week for stocks since April. S&P 500 futures (ES00) slipped 0.1% while Nasdaq-100 futures (NQ00) were up fractionally. Bitcoin (BTCUSD) was trading below $65,000, but was still up more than 3% over the past week.
West Texas Intermediate crude (CL.1), the U.S. benchmark, rose about 0.7%, near $79 a barrel on Sunday, after settling Friday at $78.18, falling more than 11% last week on optimism that a new ceasefire deal between the U.S. and Iran would be reached soon. Lower oil prices and a weak jobs report also helped push down Treasury yields last week.
Iran has indicated it is close to a deal with Oman over managing shipping traffic through the strategic Strait of Hormuz, which has been largely shut since the start of the war in late February, constricting the world's supply of oil.
But on Saturday, Iran demanded billions of dollars in compensation by the U.S., along with the withdrawal of U.S. troops from the region and the end of the U.S. naval blockade on Iranian ports, before the waterway can be fully reopened, the Associated Press reported. There was no immediate comment from the White House.
President Donald Trump has repeatedly threatened even heavier bombing attacks against Iran, though it appears U.S. options for ending the conflict on its own terms are limited.
On Friday, the S&P 500 closed at a record high as the broader stock market had its best week in four months, as a weaker-than-expected jobs report eased fears of an imminent interest-rate hike. For the week, the S&P 500 SPX gained 3.6%, while the Dow DJIA rose 3% and the Nasdaq COMP jumped 5.2%.
With earnings season winding down, investors' focus will shift to inflation data this week. July's consumer-price index is set to be released Wednesday, and the producer-price index is scheduled for Thursday. CPI data is expected to reflect higher oil prices in late July as the Iran ceasefire deal fell apart.
Inflation remains the biggest challenge for the Federal Reserve, which has seen readings well above its 2% target for years.
Wednesday's CPI reading is the "next proper test" for the market, said Stephen Innes, managing partner at SPI Asset Management, in a weekend note.
"The market has quickly moved toward a fairly friendly combination: softer employment, lower yields, easing energy pressure and a Fed that may be able to stay on hold. That is a good setup for equities, but only if inflation plays along," he wrote.
"A benign print would allow the market to keep leaning into the same playbook: slower growth, contained inflation and a Fed that can stay patient," Innes continued, but he added that a hotter print could put semiconductor stocks back into the spotlight, as that sector appears to be "one of the cleanest places to judge whether risk appetite has genuinely repaired."
On the earnings front, the big names this week will be Lumentum $(LITE)$ and Super Micro Computer $(SMCI)$, which both report Tuesday, Cisco $(CSCO)$ on Wednesday and Applied Materials $(AMAT)$ on Thursday. S&P 500 companies are on pace to show 15% revenue growth for the second quarter, which would be the highest quarter for sales growth since early 2021, according to FactSet data.
-Mike Murphy
