U.S. futures rise as investors weigh Iran deal and Fed

Highlights

S&P 500 futures rose 0.7%, while Nasdaq futures gained 1.1%.
Brent crude fell below $78 a barrel.
The Fed held rates steady but signaled possible hikes later this year.
The U.S.-Iran deal reduced geopolitical risk tied to the Strait of Hormuz.

Futures rebound after Fed selloff

S&P 500 futures rose 0.8%, while Nasdaq 100 and Dow Jones futures gained 1.4% and 0.5%, respectively, partly recovering from Wednesday’s losses. The S&P 500 fell 1.2% after the Federal Reserve left interest rates unchanged but signaled that borrowing costs may need to rise further to contain inflation, Bloomberg reports.

The move showed how quickly investor attention shifted from monetary policy to geopolitics. The Fed’s message remains a headwind for stocks, but lower oil prices eased some concern that the Iran war would keep inflation elevated and force the central bank into a more aggressive stance.

Brent crude fell below $78 a barrel, after President Donald Trump signed an interim memorandum with Iran. The agreement is expected to reopen the Strait of Hormuz, a key energy chokepoint, although it remained unclear whether Tehran had started the steps needed to restore full traffic.

Oil relief offsets higher-rate risk

The Fed decision marked the fourth straight meeting at which policymakers held rates steady. Officials described growth as solid and pointed to strong productivity and capital investment, while making clear that inflation now outweighs labor-market weakness as the main policy concern.

Roughly half of Fed officials projected rate increases this year. Traders fully priced in an increase by October and saw a strong chance of a move as soon as September. Treasury yields eased Thursday after rising in response to the Fed, with the 10-year yield slipping four basis points to 4.45% and the two-year yield falling two basis points to 4.16%.

The relief in equities was driven largely by energy. Lower oil reduces pressure on inflation expectations, household costs and corporate margins.

Markets balance peace hopes and Fed pressure

The U.S.-Iran agreement has shifted the immediate market narrative. Investors are no longer pricing only the risk of energy disruption; they are also pricing the possibility that Gulf oil flows normalize and the inflation shock fades.

That does not remove the Fed problem. Inflation remains above target, and Warsh declined to provide clear guidance on the next policy move in his first press conference as Fed chair. He also announced a task force to review the Fed’s $6.7 trillion balance sheet, another sign that policy may become less predictable.

For now, lower oil is helping equities absorb the prospect of higher rates. The question is whether the deal can hold long enough to restore energy flows and keep inflation expectations contained.

We also reported IEA warns of weaker oil demand and supply surplus by 2027.

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