US stock futures edged modestly higher overnight Sunday, with Dow futures climbing 0.3% and S&P 500 and Nasdaq futures both gaining around 0.4%, according to overnight trading data.
The cautious bounce comes after a bruising three-week stretch for equities, with the S&P 500 closing Friday at 6,632 — its lowest point of the year and its weakest level since November 2025.
West Texas Intermediate crude hit $98.71 per barrel on Friday, up more than 3% for the session, with Brent crossing $103 — the first time it has closed above $100 since August 2022.
The driver behind the entire market narrative right now is the US-Israeli war with Iran, which effectively closed the Strait of Hormuz when strikes began in late February.
Roughly 20% of global oil consumption previously moved through that corridor, and with traffic now at a near-complete halt, markets have been repricing every assumption they held about 2026 growth and inflation.
The Federal Reserve holds its second policy meeting of the year this week, concluding Wednesday with a rate decision that almost nobody expects to produce a cut.
“They’re kind of between their two mandates — they kind of got them going different directions right now,” said Will McGough, chief investment officer at Prime Capital Financial. “The labor market is a little weakish, which should suggest a cut. Inflation is a little stubborn — probably going higher — which suggests a raise. So, those two net-net all set to: do nothing.”
What traders are actually watching for is any Fed signal about the timeline for eventual cuts, given that futures markets have dramatically scaled back expectations and are now pricing only a single December reduction for the year.
Sameer Samana of Wells Fargo Investment Institute summarised the dominant market question as simply: “The duration of the closure in the Strait of Hormuz is the key factor and markets will be watching for progress.”
Beyond the Fed and oil, this week also brings Dollar Tree earnings before Monday’s open and Micron Technology and FedEx results later in the week, giving investors a read on both discount retail health and logistics demand.
Nvidia’s GTC developer conference also starts today in San Jose, with Jensen Huang’s keynote beginning at 11am Pacific — a potential counterweight to geopolitical gloom if the chipmaker delivers meaningful announcements to a market that badly needs a positive catalyst.
The S&P 500 is now approximately 4% below its January all-time high, which sounds manageable in isolation but sits against a backdrop of accelerating inflation expectations, softening consumer sentiment, and a war with no visible exit strategy — a combination that gives Monday’s gains little conviction behind them.