By Purvi Agarwal and Avinash P
April 6 (Reuters) – The S&P 500 and the Nasdaq were on track for a higher open on Monday after Wall Street indexes marked their biggest weekly jump in four months in the last session, while investors assessed prospects of an end to the Middle East conflict.
The U.S. and Iran received a framework of a plan to end the hostilities, though Iran rejected any immediate move to reopen the Strait of Hormuz. U.S. President Donald Trump set a Tuesday deadline to reopen the waterway.
Still, investors drew some comfort from an Axios report that cited sources familiar with the talks, that the U.S., Iran and a group of regional mediators are discussing the terms for a potential 45-day ceasefire.
Oil prices fell on Monday and U.S. energy stocks were a little lower in premarket trading. ConocoPhillips and Occidental Petroleum fell about 1% each.
“The stock market is a very good barometer of future activities … it would imply that investors are at least expecting a recovery from the selloff that we experienced,” said Sam Stovall, chief investment strategist at CFRA Research.
“Wall Street is willing to take a wait-and-see attitude, but is betting that the outcome is positive.”
Trading volumes on Monday were expected to be thin as many markets in Europe and Asia are closed for public holidays.
At 8:41 a.m. ET, Dow E-minis were down 26 points, or 0.06%, S&P 500 E-minis were up 7 points, or 0.11% and Nasdaq 100 E-minis were up 95 points, or 0.39%.
The CBOE Volatility Index, also known as Wall Street’s fear gauge, ticked up 1.07 points to 24.94 after three sessions of declines.
“That’s the market saying ‘we think he blinks again — but we’re buying protection just in case’. This is the classic Trump deadline extension trade, not genuine optimism,” said Pete Mulmat, head of brokerage strategy and operations at IG North America, on why stocks and the VIX index were up simultaneously.
Wall Street’s main indexes ended mixed on Thursday but posted their first weekly gains in six as the prospects of an end to the conflict soothed investor nerves.
Meanwhile, the prolonged closure of the Strait of Hormuz, an essential chokepoint in global oil trade, has weighed on energy prices and has reinforced inflation fears.
This week, investors will parse a slew of domestic data including inflation readings to see if the price pressures have trickled into the economy after Friday’s data showed U.S. job growth rebounded more than expected in March.
The Institute for Supply Management’s non-manufacturing PMI for March will be watched later in the day.
Money market participants are not pricing in any easing from the central bank this year, compared to two cuts they had expected before the war broke out, per CME Group’s FedWatch Tool.
Among premarket moves, Soleno Therapeutics shares surged about 33% after Neurocrine Biosciences agreed to acquire the rare-disease drugmaker for $2.9 billion in cash.
U.S.-listed shares of cryptocurrency-linked firms rose, with Coinbase and Strategy up 3.2% and 4%, respectively, as bitcoin prices edged higher.
(Reporting by Purvi Agarwal and Avinash P in Bengaluru, and Vidya Ranganathan; Editing by Shinjini Ganguli and Maju Samuel)
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