Key Points
- SP500 traded at 7167.05, down 3.41 points, or 0.05%, after reaching a session high of 7185.35.
- S&P 500 and Nasdaq 100 futures advanced on Monday after Iran sent a new proposal to the US on reopening the Strait of Hormuz.
- Microsoft, Amazon, Alphabet, Meta, and Apple earnings now sit beside Wednesday’s Federal Reserve decision as the main market tests.
US equity futures began Monday with a nervous tone, then reversed as traders reacted to a fresh diplomatic signal from Iran. S&P 500 and Nasdaq 100 futures advanced after Iran submitted a new proposal to the US aimed at reopening the Strait of Hormuz and easing tensions. The proposal was delivered via Pakistani mediators and focused first on de-escalation and maritime access, with nuclear talks pushed into a later phase.
That shift helped risk appetite recover from earlier losses. The market had opened lower after President Donald Trump cancelled plans to send senior envoys for a second round of talks with Iran. Tehran also repeated that it would not negotiate under threats or blockade conditions. The proposal now gives traders a reason to price a lower tail risk, even if the wider conflict remains unresolved.
Hormuz Still Holds The Market’s Nerve Centre
Iran’s proposal reportedly calls for extending the ceasefire to support progress toward a lasting settlement, while deferring nuclear negotiations until the US blockade of the Strait of Hormuz is lifted.
This gives markets a cleaner short-term framework: reopen the strait first, then argue over the nuclear track later. The plan, delivered through Pakistani mediators, would extend the ceasefire while nuclear talks come later after the blockade is lifted.
That sequencing helped equities because the Strait of Hormuz sits at the centre of the inflation trade. When traders fear a longer disruption, oil prices rise, fuel costs climb, and bond markets start to question how quickly inflation can cool. When diplomacy looks possible, equities usually get breathing room, especially growth stocks and tech.
Still, the market has not fully removed the risk premium. The S&P 500 and Nasdaq-100 futures edged up 0.1% and 0.3%, respectively, while oil traded above $95 a barrel as geopolitical risk stayed active. Traders are watching whether Iran’s offer to reopen the strait could cool pressure across energy markets.
If talks gain pace and shipping risk falls, SP500 could extend toward fresh highs. If the talks stall again, oil could rise and pull equities back through a stronger inflation-risk channel.
Big Tech Earnings Take Over The Next Trade
The next test comes from megacap technology earnings. Traders are turning to Microsoft, Amazon, Alphabet, Meta, and Apple this week. This group carries heavy index weight, so earnings guidance will matter as much as the headline numbers.
The market wants proof that AI spending still supports revenue growth, cloud demand, margins, and forward guidance. Apple, Amazon, Google, Microsoft, and Meta lead a heavy earnings week, while AI and semiconductor stocks helped push the Nasdaq and S&P 500 to fresh highs in the prior week.
This creates a narrow path for bulls. Strong earnings can confirm the rally and draw buyers back into growth names. Weak guidance could hurt the index even if the Hormuz story improves, because SP500 has already rallied hard from its early-April low.
Traders may reward firms that show margin control and clear AI returns. They may punish companies that rely too much on long-term AI promises without near-term earnings support.
Fed Decision Keeps Rate Risk In Play
The Federal Reserve is widely expected to keep its policy rate unchanged on Wednesday. The Fed is expected to hold the fed funds rate at 3.50% to 3.75% as it weighs inflation risks tied to surging oil prices and awaits confirmation of its new chair.
That puts Chair Jerome Powell’s tone at the centre of the market. A steady rate decision alone may not move equities much. The press conference could. Traders will listen for any sign that higher oil prices are slowing the case for further easing, or that the Fed still sees inflation cooling enough to support future cuts.
The Fed decision also lands in the same week as Big Tech earnings. Saxo described Wednesday as a volatility cluster, with the Fed decision arriving before major technology earnings from Alphabet, Amazon, Meta, and Microsoft after the close.
If Powell sounds calm on inflation and Big Tech delivers solid guidance, SP500 can hold its breakout tone. If Powell leans hawkish while earnings disappoint, the index could struggle to defend its short-term moving averages.
Technical Analysis Shows A Strong But Crowded Rally
SP500 is trading near 7167, holding just below recent highs after a strong rally from the 6318 low. Price action shows a steady advance with higher highs and higher lows, although momentum is beginning to slow as the index approaches resistance.
From a technical standpoint, the bias remains firmly bullish in the near term. Price is trading well above all key moving averages, with the 5-day (7135) and 10-day (7098) sloping upward and providing immediate support. The 20-day (6892) sits further below and continues to trend higher, reinforcing the strength of the current uptrend.
Key levels to watch:
- Support: 7135 → 7095 → 6890
- Resistance: 7185 → 7250 → 7350
The index is currently testing the 7185 resistance zone, which aligns with recent highs. A clean break above this level could extend the rally toward 7250, with further upside potential if momentum accelerates.
On the downside, 7135 is acting as immediate support. A break below this level could lead to a short-term pullback toward 7095, though such a move would likely remain corrective as long as price holds above the rising 20-day average.
Overall, the SP500 remains in a strong uptrend with signs of near-term consolidation, as price pauses beneath resistance. The focus now is on whether buyers can push through 7185, or if the market pulls back slightly to reset before the next leg higher.
What Traders Should Watch Next
SP500 now sits between three forces: diplomacy, earnings, and the Fed. A stable Hormuz backdrop can support risk appetite, but the index still needs Big Tech earnings to justify its premium near record territory.
A clean move above 7185.35 would keep 7256.27 in focus. Failure to hold 7135.39 would point to a short-term reset, especially if oil rises again or Powell pushes back against rate-cut hopes. The broader bias stays constructive while price holds above 7097.97, but the rally looks more exposed to headline shocks after such a fast climb from 6318.04.
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Trader Questions
Why Did The SP500 Rebound On Monday?
The SP500 rebounded after reports said Iran had submitted a new proposal to the US aimed at reopening the Strait of Hormuz and easing tensions.
The move helped S&P 500 and Nasdaq 100 futures reverse earlier losses after a weaker start to the session. Traders treated the proposal as a short-term relief signal, even though wider geopolitical risk remains active.
What Is Iran’s New Proposal About?
Iran’s proposal was reportedly delivered through Pakistani mediators. It called for extending the ceasefire to support progress toward a lasting settlement.
The proposal also deferred nuclear negotiations until the US blockade of the Strait of Hormuz is lifted. This gave markets a clearer short-term focus: reopen the strait first, then return to the harder nuclear talks later.
Why Does The Strait Of Hormuz Matter For The Stock Market?
The Strait of Hormuz matters because any disruption can lift oil prices, fuel inflation fears, and raise costs for businesses and consumers.
When oil prices rise too quickly, traders often reduce exposure to risk assets such as equities. If the strait reopens or shipping risk eases, the SP500 may gain support from lower energy stress and better risk sentiment.
Why Did US Stock Futures Open Lower Earlier?
US stock futures opened lower after President Donald Trump cancelled plans to send senior envoys for a second round of talks with Iran.
Tehran also said it would not engage in negotiations under threats or blockade conditions. That raised fears that diplomacy was losing traction before the new Iranian proposal helped ease some pressure.
Which Big Tech Earnings Matter This Week?
Investors are watching earnings from Microsoft, Amazon, Alphabet, Meta, and Apple this week.
These companies carry heavy weight in the SP500 and Nasdaq 100. Their results could shape market direction, especially if guidance gives traders a clearer view on AI spending, cloud demand, margins, advertising growth, and consumer demand.
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