U.S. stock futures climbed Monday after President Donald Trump walked back planned strikes against Iran, a move that pushed oil prices sharply lower to open August trading.
The Dow Jones Industrial Average futures were up 535 points, or 1%, while S&P 500 futures added 0.6% and Nasdaq $NDAQ-100 futures were 0.2% higher. In energy markets, Brent crude dropped 5.2% to $83.39 a barrel and West Texas Intermediate lost 6.2%, settling at $79.45 a barrel.
Trump announced Sunday that he had stood down from a planned attack on Iran, with diplomatic conversations between Washington and Tehran set to begin again Monday. Earlier, Friday reporting had suggested the White House was moving toward another round of strikes after ceasefire prospects dimmed and oil markets surged.
The 10-year Treasury yield retreated 6 basis points to 4.68%, reflecting a modest pullback in inflation anxiety.
Despite the market rally, some analysts urged caution. "Investors are keeping their enthusiasm in check as 'we've been here before' and it's likely the conflict has further to go before reaching a resolution (if it ever does)," Vital Knowledge founder Adam Crisafulli wrote, according to CNBC.
The pattern of the president cycling between confrontation and negotiation — a cycle that has grown predictable but has yet to deliver lasting results — proved sufficient to lift sentiment after a turbulent July, according to The Wall Street Journal.
European stocks also gained ground. The pan-European Stoxx 600 advanced 0.3%, with Germany's DAX up 1.3% and France's CAC 40 gaining roughly 1.1%, while the U.K.'s FTSE 100 edged into negative territory. Asian trading was uneven: South Korea's Kospi gave back more than 5%, reversing part of Friday's record-breaking rally, while Japan's Nikkei 225 lost 0.94% and Australia's S&P/ASX 200 finished 0.47% to the upside.
In currency markets, the yen strengthened against the dollar after the U.S. and Japan intervened jointly to support the currency, which had hit a 40-year low late last month, according to The Wall Street Journal.
The week also brings a heavy calendar of labor market releases, with the highlight being Friday's July jobs report. Economists polled by FactSet project the U.S. added 87,500 positions last month, a step up from June's 57,000, while the jobless rate is forecast to tick up a tenth of a point to 4.3%, according to CNBC.