U.S. stock index futures declined as investor caution returned to the markets following reports suggesting a suspension of peace talks with Iran. This development renewed risk pricing around the potential escalation of conflict and rising energy prices in the coming period.
The pullback came after a strong rally on Wall Street, led by artificial intelligence-related technology stocks. However, momentum has begun to fade as indices approach record highs, prompting natural profit-taking after recent gains.
S&P 500 futures fell by around 0.2%, Nasdaq 100 futures dropped 0.35%, and Dow Jones futures declined 0.3%, reflecting a growing investor tendency to reduce risk amid escalating geopolitical uncertainty.
On the political front, Iranian media reported that Tehran has halted indirect negotiations with the United States, while also moving toward a tougher stance on the Strait of Hormuz, driven by anger over Israeli military operations in Lebanon.
In contrast, U.S. President Donald Trump issued mixed statements, initially saying he was not concerned about the breakdown of talks, before later confirming via social media that discussions with Iran are continuing at a rapid pace. Separate reports also suggested that Iran is seeking a temporary agreement with Washington, keeping the overall outlook unclear for markets.
These developments coincided with another exchange of airstrikes between the United States and Iran for the second time in a week, increasing the fragility of the current ceasefire and reducing market hopes for a near-term comprehensive deal. This shift supported oil prices and revived concerns over the economic impact of a prolonged conflict, particularly on inflation and energy costs.
Meanwhile, Wall Street closed Monday’s session at record levels, supported by strong gains in technology stocks, especially those linked to artificial intelligence. The S&P 500 rose 0.3%, the Nasdaq Composite gained about 0.4%, and the Dow Jones added a modest 0.1%.
The semiconductor sector led gains, with the Philadelphia Semiconductor Index rising 1.1%, driven by a sharp rally in Nvidia, which jumped more than 6% after announcing a new generation of AI chips, including versions designed for Microsoft Windows based systems.
Despite this strength, signs of slowdown have begun to emerge in the chip sector after an extended rally in May, increasing the likelihood of profit taking at current levels. Major tech stocks such as Tesla, Amazon, Apple, and Alphabet also declined between 1% and 5%, reflecting broader cooling across the sector.
Alphabet fell in after hours trading after announcing plans to raise $80 billion through equity offerings, including an investment deal with Berkshire Hathaway, adding further pressure on the stock outside regular trading hours.
Overall, U.S. markets appear caught between two opposing forces: sustained support from the artificial intelligence theme, and pressure from rising geopolitical risks and higher energy prices. As indices approach historic highs, risk appetite may remain highly sensitive to further developments in the Iran situation or the technology sector.
On the currency side, the U.S. dollar remained stable amid uncertainty over negotiations between the United States and Iran. Currency movements were largely muted after reports indicated a breakdown in communication via intermediaries, while President Donald Trump pointed to rapid progress in talks and a potential agreement within the next week.
Despite some easing tensions following a partial ceasefire between Hezbollah and Israel, ongoing instability in the Middle East continues to support demand for the dollar as a relative safe-haven asset until the situation becomes clearer.
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