KEY POINTS
- Nasdaq futures surged 1.63% and S&P futures gained 0.8% Thursday morning as the US-Iran interim peace deal offset Wednesday's hawkish Fed sell-off.
- WTI crude oil fell to $74.56 per barrel, down nearly 3%, on expectations that 1.5 to 2 million barrels of Iranian supply could return to the market.
- Thursday is the last trading session before the Juneteenth holiday, setting up a compressed window for positioning around the Fed and geopolitical developments.
Stock futures rallied Thursday morning as Wall Street shifted its focus from Wednesday's hawkish Federal Reserve meeting to the geopolitical breakthrough between Washington and Tehran. Nasdaq 100 futures jumped 1.63%, S&P 500 futures climbed 0.8%, and Dow futures added 311 points as traders positioned for the final session before the Juneteenth holiday closure on Friday.
The rally attempted to claw back a chunk of Wednesday's damage. The S&P 500 had dropped 1.21% to 7,420.10 after the FOMC dot plot showed half the committee projecting at least one rate hike by year-end. But overnight, the calculus shifted. The signing of the interim US-Iran peace deal, which includes the reopening of the Strait of Hormuz and the lifting of the US naval blockade on Iranian oil exports, gave risk assets a clear catalyst.
Oil's Collapse Changes the Inflation Math
WTI crude fell to $74.56 per barrel on Thursday, down nearly 3% on the session and more than 5% below levels from earlier in the week. Brent crude slipped to $77.22. The decline reflects the market pricing in the potential return of 1.5 to 2 million barrels per day of Iranian supply, along with the removal of a geopolitical risk premium that analysts at J.P. Morgan estimated had added $10 to $15 per barrel during peak tensions.
This matters far beyond the energy complex. One of the Fed's central concerns, and the reason half the committee is projecting rate hikes, is that inflation has proven stickier than expected. The May PPI came in at 6.5% year-over-year, driven in large part by energy costs. Gasoline station sales led the May retail report, surging 3.4%. If oil prices stabilize in the mid-$70s rather than the high $80s, the energy component of both PPI and CPI should begin to moderate in the coming months. That would weaken the case for the hawkish dots in the Fed's projection.
The bond market took notice. The 10-year Treasury yield, which had surged to 4.50% on Wednesday, held steady Thursday morning rather than continuing higher. If the peace deal holds and oil stays down, the yield curve could begin to flatten again as inflation expectations recede.
Tech Leads, Energy Lags
The sector rotation was textbook. Nasdaq futures outperformed as lower oil prices and easing geopolitical risk favored growth and technology stocks. Nvidia, which had slipped 1.5% on Wednesday to close at $204.65, showed strength in premarket trading. The broader semiconductor complex and mega-cap tech names benefited from the risk-on tone.
Airlines and travel stocks extended their rally from earlier in the week. United Airlines, Delta, and American Airlines had each gained roughly 4.5% on Monday when the preliminary deal was first announced. Cruise lines and shipping companies also benefited from the prospect of lower fuel costs and safer maritime routes through the Strait of Hormuz, which handles roughly 20% of the world's oil supply.
Energy stocks moved in the opposite direction. With WTI below $75 for the first time since the US-Iran conflict escalated, exploration and production companies face margin compression. The energy sector, which had been one of the strongest performers in 2026 on the back of elevated oil prices, is now repricing for a world where the geopolitical premium evaporates.
A Compressed Session With Outsized Stakes
Thursday is the last trading session before markets close for Juneteenth on Friday. That compression matters. Traders have to digest three major developments in a single session: the hawkish Fed dot plot from Wednesday, the Iran peace deal, and the morning's economic data, which included weekly jobless claims rising to 229,000, above the 220,000 consensus.
Volume could be elevated as portfolio managers adjust positions ahead of the long weekend. The options market will be watching the S&P 500's ability to reclaim the 7,500 level, which would represent a full reversal of Wednesday's post-Fed decline. The Nasdaq's premarket strength, led by tech and semiconductors, suggests that level is within reach.
The bigger question is whether this rally has legs beyond the holiday. The peace deal removes a tail risk that has hung over markets for months, but the Fed's hawkish posture is not going away. If the dot plot is the roadmap, even without Warsh's dot on it, the market must contend with a central bank that sees inflation as a problem requiring higher rates. The tug-of-war between geopolitical relief and monetary tightening will define the second half of 2026. For now, the bulls have the morning.
