US stock futures rallied on Monday as oil prices slid, with Wall Street looking to recover from a mostly losing week. Dow Jones Industrial Average futures rose 407 points, or 0.8%, while S&P 500 futures climbed 0.7% and Nasdaq-100 futures gained 1.1%, per CNBC. US crude dropped 3% to $97.09 per barrel and international benchmark Brent slid more than 3% to $100.50, pulling Treasury yields lower with them.
The moves came after a weekend of escalation in the Middle East that somehow left markets calmer, not more nervous. Iran-backed Houthis said they attacked Saudi Arabia with missiles and drones on Saturday. The US State Department later warned Americans to reconsider traveling to the Middle East as Washington and Tehran traded threats to resume attacks. Traders focused instead on signs the warring parties might step back from a wider confrontation, and on Saudi Arabia’s progress repairing its damaged East-West pipeline.
JPMorgan analysts noted recently that oil flows “remain surprisingly strong” despite the disruptions, a judgment that has underpinned the view that $100 crude is a risk premium rather than a physical shortage. Reuters reported the 2% slide in oil pulled Treasury yields lower as signs emerged the Middle East parties were looking for an off-ramp.
Last week’s damage
| Index | Week change | Note |
|---|---|---|
| Dow Jones | -1.7% | Worst week since March |
| S&P 500 | -0.1% | Third straight losing week |
| Nasdaq | +0.7% | Only major index higher |
| 10-year Treasury | Near 5% | Close to cycle highs |
| WTI crude | $97.09 | -3% Monday |
The Dow slid 1.7% last week for its worst performance since March. The S&P 500 lost about 0.1% and only the tech-heavy Nasdaq posted a gain, up 0.7%. The Federal Reserve hiked interest rates by 25 basis points on Sept. 16, its first increase in three years, as the economy struggles with sticky inflation and elevated bond yields. Oil remains near $100 a barrel and the 10-year Treasury yield is hovering close to 5%, a combination that has kept pressure on valuation-sensitive sectors.
“The same geopolitical conflict inflating energy prices is also what’s keeping the [Federal Reserve] hawkish and what’s squeezing Chinese refiners,” wrote Jeffrey Roach, chief economist at LPL Financial. Fed Chairman Kevin Warsh’s committee “has conditioned its inflation outlook on oil markets settling down, and Beijing’s fiscal calculus runs through the same variable.”
Europe and Asia open higher
European stocks opened higher as lower oil and renewed focus on a potential US-Iran deal improved sentiment. The Stoxx 600 index was up 0.63% in early London trade, following three straight losing weeks. Technology and financial stocks led, while oil and gas shares retreated. Volkswagen fell out of the blue-chip Euro Stoxx 50 index in September’s reshuffle, a milestone for a company whose shares have dropped 27.5% this year and now trade near their lowest level since 2010. The German automaker approved the next stage of a restructure this month that will cut 100,000 jobs.
In Asia, South Korea’s Kospi rose 1.65% to 7,007.72 and mainland China’s CSI 300 closed 0.71% higher at 4,539.56. Hong Kong’s Hang Seng added 0.95% in late trade and Australia’s S&P/ASX 200 was flat at 8,731.90. Japan’s markets were closed for a holiday. Technology shares in South Korea and Taiwan led the region higher, continuing the AI trade that has carried equity markets all year.
Trump-Xi summit in focus
The week’s biggest event is a summit between President Donald Trump and Chinese President Xi Jinping covering tariffs, critical minerals and artificial intelligence. Treasury Secretary Scott Bessent met Vice Premier He Lifeng in New York ahead of the visit, with US officials describing the talks as constructive. Trade and AI negotiations opened over the weekend and continue into the summit itself, and both governments have signaled they want deliverables rather than another round of positioning.
Markets have treated the meeting as a genuine de-risking opportunity rather than routine diplomacy. Crypto and equities both rallied on the tone of the pre-summit talks, and analysts at BTSE and elsewhere flagged that a tariff truce would remove one of the few remaining macro overhangs heading into the Fed’s late-October meeting.
Corporate movers
Novo Nordisk shares fell as much as 7% in Monday trading despite the company laying out an ambitious post-Wegovy strategy. The Danish drugmaker said it aims to launch more than five drugs with “multi-blockbuster” potential by 2030 and generate more than 150 billion Danish kroner, about $23 billion, in pipeline sales by 2035. Investors were unconvinced it can defend its obesity-drug lead in an increasingly crowded field it helped create.
US-listed stocks tied to Greenland surged in premarket trading after Trump announced a security deal covering the Arctic island, expected to be signed during the UN General Assembly this week. Greenland Energy soared more than 144% premarket, Greenland Mines rose nearly 70% and Critical Metals Corp gained more than 30%. The pact, which the US, Denmark and Greenland are set to enter, would develop a significant military presence on the island, though key details have not been made public.
What to watch
With no major US economic data on Monday’s calendar, attention stays on oil, the Middle East headlines and the Trump-Xi meeting. Fed officials speak throughout the week, and markets will parse every word for hints about whether the October meeting brings another hike or a pause. If oil keeps sliding toward $95, the inflation outlook that drove the September hike gets easier, and so does the path for equities.