As of 8:30am CT on Monday, Wall Street futures were climbing hard. Dow E-minis were up 311 points, or 0.6%, S&P 500 E-minis added 48.75 points, or 0.63%, and Nasdaq 100 E-minis jumped 327.25 points, or 1.09% at 5:09 a.m. ET. After three straight losing weeks for the Dow, investors walked into the week ready for some good news, and this morning is handing them a bit of it.
The spark is oil. Brent crude fell more than 2% to trade around $101 a barrel, on track for a fourth straight day of losses, while West Texas Intermediate dropped below $98 after touching near $107 last week. Why the relief? Markets are betting that diplomacy might catch up with the drones. Saudi Arabia expects to restore about half of its damaged East-West pipeline capacity within days, and crude exports have already recovered from their August lows, according to Capital.com analyst Daniela Hathorn. President Donald Trump also said he would be open to meeting Iranian President Masoud Pezeshkian, who is expected in New York this week for the UN General Assembly Reuters reported.
Why it matters: cheaper oil is the closest thing the average household gets to an interest rate cut. It softens the price of everything that moves, and it pulled the 10-year Treasury yield below the keenly watched 5% mark, down to about 4.95%, per Investopedia. That matters for your mortgage, your credit card, and your small business loan. Energy-sensitive airlines caught the wave, with Delta and American each gaining about 1% in premarket trading.
Meanwhile, the AI trade is back from the dead. A week ago, doomsday talk from AI bosses sparked a rout in the sector. This morning, chips are leading the charge: Intel rose 5.4%, Marvell added 2.6%, Meta climbed 2.4%, and Dell advanced 2.7% Reuters reported. Accenture surged 6% after partnering with Anthropic to invest $2 billion in AI evaluation, and Warner Bros Discovery and Paramount Skydance jumped more than 7% and 6% premarket on reports that talks to settle the state lawsuit blocking their merger are advancing Morningstar reported.
Overnight, Asia and Europe set the tone. South Korea’s Kospi added 1.65% as Samsung Electronics jumped 5%, Japan’s Nikkei rose 1.4%, and Shanghai’s SSE composite was up 1%, while Europe’s Stoxx 600 gained 1.2% on bank and tech strength, Morningstar reported. By 0710 GMT the STOXX 600 was up 0.56% at 638.98 points, with travel stocks rising 0.86% as cheaper oil lifted airlines and energy shares slipping 0.62%.
The backdrop is still fragile. Last week’s Federal Reserve rate hike, the first in three years, took the target range to 3.75%-4.00%, and markets now see a 53% chance of another increase next month according to the CME Group’s FedWatch tool. Houthi attacks on Saudi infrastructure remain an obvious risk, and none of this resolves the Middle East conflict, as Hathorn cautioned.
What to watch next: whether crude keeps sliding through the day, how the 10-year behaves near 5%, and whether today’s chip rally has legs once the opening bell rings. With Chicago Fed President Austan Goolsbee speaking today and about ten more Fed officials lined up this week, the policy drumbeat won’t let up. Enjoy the green futures, but keep your seatbelt on.
