Stock futures are ripping higher Friday morning after the US and Iran agreed to extend the ceasefire framework announced late Thursday. S&P 500 futures are up 1.3%. Nasdaq-100 futures are ahead 1.5%. Dow futures are gaining 375 points. This is shaping up to be the biggest pre-market rally in three months.
Here’s what we know: the ceasefire extension runs through August and includes provisions for sanctions relief discussions. That’s a bigger deal than the initial 60-day halt. The market is treating this as a paradigm shift — lower geopolitical risk, lower oil prices, and a cleaner path for risk assets into the summer.
The VIX is plunging. It’s down to 17.40 in pre-market, its lowest reading since April. That’s a 38% drop from the mid-May spike above 28. Bond yields are steady at 4.36% on the 10-year. The dollar is edging lower. This is a textbook risk-on setup across every asset class.
Elsewhere, oil is getting crushed. WTI crude is down 4.2% to $78.80 as the ceasefire extension raises the probability of Iranian barrels returning to market. That’s good news for consumers, great news for airlines and retailers, and terrible news for energy stocks. The XLE is already down 2.1% in pre-market.
Data calendar is light — just final Michigan consumer sentiment at 10:00 AM ET. After that, it’s all about the open. Watch breadth: if 80%+ of S&P stocks open green, this rally has legs into the long weekend.
