Despite the rebound in futures, Stocktwits data showed retail sentiment has moved to ‘bearish’ on SPY and QQQ.
- Trump announced a peace framework with Iran, easing concerns over disruptions in the Strait of Hormuz.
- Focus will shift to Wednesday’s Fed decision and whether policymakers maintain a cautious stance on rates.
- Market strategist Citrini noted over the weekend that the recent pullback likely represented a delayed washout in crowded momentum trades, but 10% to 15% drawdowns could become more frequent as the rally matures.
U.S. stock futures rallied sharply early Monday after a diplomatic breakthrough in the Middle East, with investors cheering the confirmation of a long-awaited peace agreement between the United States and Iran, sending crude oil prices tumbling.
President Trump announced that a peace framework had been reached with Iran, paving the way for the reopening of the Strait of Hormuz, a key shipping route that handles roughly 20% of global oil flows. The deal is expected to be signed by representatives in a high-profile meeting in Switzerland later this week.
Analysts Urge Caution Despite The Rally
Several Wall Street analysts struck a more measured tone even as markets celebrated. Commerzbank’s Joerg Kraemer noted that key issues remain unresolved in the agreement, with details on Iran’s nuclear program and other sticking points still to be worked out during the deal’s 60-day negotiation period. “We expect a rollercoaster of good and bad news over the next two months,” he said, citing scenarios such as Hezbollah resuming attacks on northern Israel, which could prompt an Israeli response and risk Iran closing the Strait again. Still, he noted that the overnight rally suggests markets may now expect oil to settle below the roughly $100 level previously anticipated.
Tickmill Group analyst Patrick Munnelly cautioned that the deal isn’t a “full return to the pre-conflict world.” While it’s a clear risk-positive development that has fueled a powerful equity rally, oil remains above its February level and inflation risks haven’t disappeared overnight. Markets are still pricing in around 15 basis points of Fed rate hikes even after the agreement, which Munnelly said “investors are not treating the deal as a full macro reset” and remain cautious on inflation, labor market resilience, and central bank policy.
Attention now turns to the Federal Reserve’s policy meeting on Wednesday, the first under newly appointed Chair Kevin Warsh, where rates are expected to hold steady.
As of 4:50 a.m. ET, Nasdaq futures surged over 2%, S&P 500 futures gained 1.2%, Dow futures were up nearly 1%, and Russell 2000 futures gained 1.6%.
However, retail caution persists ahead of the formal signing of the peace agreement on Friday. On Stocktwits, the retail sentiment for the SPDR S&P 500 ETF (SPY), an exchange-traded fund that tracks the S&P 500 Index, and the Invesco QQQ Trust (QQQ) ETF, which tracks the Nasdaq-100 Index, has moved to ‘bearish’ from ‘bullish’ last week.
Market strategist Citrini noted over the weekend that the recent pullback likely represented a delayed washout in crowded momentum trades, but 10% to 15% drawdowns could become more frequent as the rally matures.
Trending Stocks To Watch
SpaceX (SPCX): After a blockbuster debut on Friday, shares surged 6% in early premarket trade on Monday, amplified by CEO Elon Musk’s bold prediction on X that the newly public giant could hit $1 trillion in annual revenue by 2030.
Rocket Lab USA (RKLB): Stock rose 7% in early premarket trade after the company revealed that its New Zealand hangar is packed with an unprecedented number of Electron rockets ahead of a busy launch schedule. Meanwhile, KeyBanc has upgraded the stock to Overweight with a $135 price target.
AST SpaceMobile (ASTS): Jumped 6% in early premarket trade as investors anticipate a major catalyst out of Japan. Reports indicate a Rakuten Mobile-AST SpaceMobile alliance is a top contender for a lucrative 150 billion yen ($1 billion) “Japanese Starlink” project.
Other space proxy stocks, such as Redwire Corp. (RDW), Intuitive Machines (LUNR), and satellite and space proxies (NASA, SATS, SPCE, IRDM, PL), continue to rise.
Redcat Holdings (RCAT): Climbed 5% premarket after launching “Hellcat,” a new dual-use small unmanned aircraft system built on its established Black Widow military drone platform.
Nvidia (NVDA) rose 3% in early premarket on reports that it is co-developing an early 800V direct-current power architecture alongside Google. Meanwhile, Kazakhstan has reportedly announced agreements involving Nvidia-backed AI infrastructure projects that could attract up to $10 billion in investment.
Other chip and memory stocks, such as Micron (MU), Sandisk (SNDK), Intel (INTC), and AMD, also clocked gains in early premarket trade on easing geopolitical tensions in the Middle East. The other pocket making seeing beneficiary trade is airlines (AAL, UAL, DAL, LUV) and cruise lines (CCL, RCL, NCLH).
Oklo Inc. (OKLO): Popped over 4%, reversing two down weeks after the U.S. Department of Energy approved a foundational safety blueprint (PDSA) for its Aurora powerhouse reactor pilot program in Idaho.
NuScale Power (SMR) surged 8% in early premarket trade on news reports that the Japanese government plans to invest up to $25 billion into NuScale’s small modular nuclear reactors as part of a trade package worked out with the Trump administration.
Rumble (RUM): Advanced over 5% after CEO Chris Pavlovski was highly visible alongside top political figures at a high-profile “Freedom 250” White House event, with investors speculating about a potential cloud contract soon.
Intellia Therapeutics (NTLA) stock rose over 4% in premarket trading on positive additional clinical data coming out of its hereditary angioedema therapy trials.
Other tickers trending on Stocktwits at the time of writing included Palantir Technologies (PLTR), Circle (CRCL), and Marathon Digital (MARA).
Other Catalysts To Watch
On the economic front, investors are tracking the release of housing starts and the import price index later today.
On earnings radar, watch out for quarterly reports from Vistagen Therapeutics (VTGN), Sonoma Pharmaceuticals (SNOA), Beyond Air (XAIR), and Liveone (LIV), among others.
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