S&P500: US Futures Rally on Ceasefire, Eye 50-Day MA Breakout

S&P 500 Futures Gap Higher as Trump Announces Two-Week Iran Ceasefire

The major U.S. stock index futures are sharply higher overnight with the June E-mini S&P 500 Index futures contract gapping above one-month trend line resistance and soaring into an area that could become a significant barrier or the trigger point for an acceleration to the upside.

Technical Outlook

After breaking out to the upside, E-mini S&P 500 Index buyers sliced through a key 50% level at 6725.00, making it new support. The subsequent burst of momentum has the market now challenging a key 61.8% level at 6812.50, which is another trigger point for an even bigger surge into 6940.50.

Most importantly, with a little more buying juice behind it, the futures contract could overtake both the 200-day and 50-day moving averages in the same session. That would be quite a feat and a major change in trend if buyers could pull this off, especially after such a pronounced sell-off in March.

Markets Finally Get the News They Were Waiting For

Trump pulled back from the brink. A two-week suspension of attacks on Iran hit the wires just before the midnight deadline and the futures market exploded higher. Five weeks of war, a closed Strait of Hormuz and a market that had been living on edge finally got something to trade on.

The Dow futures surged 967 points or 2.1%. S&P 500 futures matched that gain and Nasdaq 100 futures jumped 2.3%. This is pure relief buying.

Oil Craters 18% as Hormuz Reopening Comes Into View

Oil got hit hard. West Texas Intermediate dropped about 18% and fell below $93 a barrel. Traders aren’t waiting to see if the ceasefire holds. They’re pricing in an open Strait of Hormuz right now.

What the Deal Looks Like

Trump said a proposal from Iran gave him something to work with. He called it double-sided, meaning both countries stand down. The Hormuz reopening is the condition. Iran said it would reopen the strait for two weeks if attacks stop completely. Israel has reportedly signed on to the temporary arrangement as well.

Caution Remains Despite the Rally

Nobody is calling this a done deal. The market has seen short-term pauses before and they haven’t held. Two weeks buys time but it doesn’t solve anything. Traders know that.

The S&P 500 is still 5.5% off its all-time high. Oil is up more than 70% this year and gas prices are sitting above $4 a gallon. The rally is real but the problems didn’t disappear overnight.

Delta Air Lines reports before Wednesday’s open and that gives the market its first look at how the war hit the airlines. That number is going to matter. Beyond that, whether the ceasefire holds is the only question anyone is really asking right now.

More Information in our Economic Calendar.