U.S. stock index futures were sluggish in early trading on Tuesday. Although the market briefly rebounded on the back of Trump’s comments, persistent tensions in the Middle East once again dampened investor sentiment. On Monday, Trump stated that following "productive" talks with Iran, he decided to delay striking Iran's power grid. However, the Israeli military claimed that Iran had fired several missiles at Israel, indicating that the conflict had not eased.
According to Deutsche Bank analyst Jim Reid, Iran repeatedly denied having talks with the U.S., leading to a reversal in the market's initial reaction. Trump's comments did not entirely eliminate market uncertainty, and investor sentiment continues to be influenced by the Middle East situation.
In the futures market, S&P 500 and Nasdaq 100 futures fluctuated slightly, and a sharp rise in oil prices triggered inflation concerns, further complicating the Fed's policy outlook. The Fed previously stated it expects to cut rates only once in 2026, a stark contrast to the earlier expectation of two rate cuts.
On Tuesday, Barclays analysts raised the year-end target for the S&P 500 index to 7,650 points, anticipating that earnings expectations will continue to support stock market performance, despite ongoing Middle East tensions and other macroeconomic risks.
