The major U.S. index futures are currently pointing to a roughly flat open on Tuesday, with stocks likely to show a lack of direction following the rally seen in the previous session.
Traders may take a step back to assess the recent strength in the markets, which has seen stocks move sharply higher over the past three sessions, lifting the Dow to a record closing high on Monday.
While news of a preliminary deal to end the monthslong U.S.-Iran war continues to generate positive sentiment, traders may wait for the agreement to be finalized before making more significant bets.
The Federal Reserve's upcoming monetary policy announcement may also keep some traders on the sidelines.
The Fed is widely expected to leave interest rates unchanged, but the accompanying statement and new Chair Kevin Warsh's post-meeting comments could impact the outlook for rates.
"Investors will be looking for clues about how Warsh intends to navigate an economy where inflation remains above target, growth is still resilient and AI-related investment continues to generate strong demand," said Daniela Hathorn, Senior Market Analyst at Capital.com.
She added, "The fall in oil prices gives policymakers more flexibility, but underlying inflation pressures have not disappeared."
After moving sharply higher early in the session, stocks continued to turn in a strong performance throughout the trading day on Monday. The major averages all showed significant moves to the upside, with the Dow reaching a new record closing high.
The major averages gave back ground going into the end of the day but still posted strong gains. The Nasdaq surged 795.10 points or 3.1 percent to 26,683.94, the S&P 500 jumped 122.83 points or 1.7 percent to 7,554.29 and the Dow advanced 468.77 points or 0.9 percent to 51,671.03.
The rally on Wall Street came following news the U.S. and Iran have reached an agreement to end more than three months of war.
President Donald Trump said in a post on Truth Social that a deal with Iran is "now complete" and authorized the "toll free opening" of the Strait or Hormuz and the immediate removal of the U.S. blockade of Iranian ports.
Trump later clarified that the Strait of Hormuz would reopen upon the signing of the deal of Friday for purposes of mine removal.
The agreement reportedly extends the U.S.-Iran ceasefire for 60 days, with the countries set to use that window to negotiate over Iran's nuclear enrichment and the disposal of its highly enriched uranium.
U.S. crude oil futures have plunged by more than 4 percent in reaction to the news, easing concerns about the outlook for inflation.
"Prior to the deal, investors had become increasingly concerned that higher energy costs would feed into broader inflation pressures and potentially force policymakers into additional tightening," said Daniela Hathorn, Senior Market Analyst at Capital.com.
"The sharp decline in oil prices does not eliminate inflation risks altogether, but it does reduce some of the urgency surrounding them," she added. "That is particularly relevant this week as the Federal Reserve meets for the first time under new Chair Kevin Warsh."
In U.S. economic news, a report released by the Federal Reserve showed a modest increase in industrial production in the U.S. in the month of May.
The Fed said industrial production crept up by 0.1 percent in May after climbing by an upwardly revised 0.9 percent in April.
Economists had expected industrial production to rise by 0.2 percent compared to the 0.7 percent increase originally reported for the previous month.
Gold stocks moved sharply higher along with the price of the precious metal, resulting in a 6.2 percent spike by the NYSE Arca Gold Bugs Index.
Substantial strength was also visible among semiconductor stocks, with the Philadelphia Semiconductor Index soaring by 5.5 percent.
Computer hardware, airline, software and retail stocks also turned in strong performances, while energy stocks bucked the uptrend amid the steep drop by the price of crude oil.
Commodity, Currency Markets
Crude oil futures are plunging $3.81 to $76.94 a barrel after plummeting $4.13 to $80.75 a barrel on Monday. Meanwhile, after jumping $112.80 to $4,351.60 ounce in the previous session, gold futures are rising $16.70 to $4,368.30 an ounce.
On the currency front, the U.S. dollar is trading at 160.32 yen compared to the 160.32 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is trading at $1.1597 compared to yesterday's $1.1590.
Asia
Asian stocks turned in a mixed performance on Tuesday as investors paused to assess the durability of the relief rally fueled by the long-awaited preliminary U.S.-Iran deal to end their conflict.
The dollar remained near 10-day lows, while gold traded higher at $4,328 an ounce, extending its recovery into a third consecutive session as a two-day policy meeting of the U.S. Federal Reserve gets underway.
Despite concerns over sticky inflation, the U.S. central bank is widely expected to keep rates on hold on Wednesday under new Chair Kevin Warsh.
Brent crude futures fell below $83 a barrel after U.S. President Donald Trump assured that the Strait of Hormuz will be "fully open" on Friday, the day the signing ceremony is scheduled for the framework agreement between Washington and Tehran to end their war in the Middle East.
China's Shanghai Composite Index slipped 0.1 percent to 4,091.89 after retail sales and fixed investment figures for May disappointed investors.
Industrial production grew slightly more than expected in the month, offering some respite to investors worried about unbalanced growth.
Hong Kong's Hang Seng Index slumped 1.4 percent to 24,493.95, dragged down by internet and technology stocks.
Japanese markets ended slightly higher after the Bank of Japan raised its interest rate to 1 percent, the highest since 1995, as it battles inflation caused by the Iran war.
"With underlying inflation approaching 2 percent, we need to be mindful of upward price risks. We will guide policy so that we won't fall behind the curve," Bank of Japan Deputy Governor Shinichi Uchida said at a press conference after the policy meeting.
The Nikkei 225 Index closed up 0.1 percent at 69,404.50, after having crossed the 70,000-point mark for the first time earlier. The broader Topix Index dipped 0.2 percent to 3,991.14.
Seoul stocks extended their winning streak to a fourth straight session, driven by gains in semiconductor and defense stocks. The Kospi Index soared 2.1 percent to 8,726.60.
Hanwha Aerospace jumped 9.1 percent and LIG D&A surged 18.6 percent on expectations of resumed arms exports following the U.S.-Iran peace agreement.
Australian markets recovered from an early slide to end marginally higher as the Reserve Bank of Australia kept its key interest rate unchanged for the first time this year, following three consecutive increases.
Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index closed 0.5 percent higher at 13,426.13, reaching its highest level in more than three months.
Europe
European shares have moved mostly higher on Tuesday as falling oil prices help ease worries about inflation and the outlook for interest rates.
Brent crude futures held near $82 a barrel after reports suggested that U.S. President Trump may release a preliminary deal to end the war with Iran before Friday.
The specific terms of the deal remain unclear, but Trump said the Strait of Hormuz could reopen as soon as Friday.
Upcoming rate decisions from the U.S. Federal Reserve and the Bank of England were also on investors' radar.
The French CAC 40 Index is up by 0.8 percent, the U.K.'s FTSE 100 Index is up by 0.6 percent and the German DAX Index is up by 0.5 percent.
UniCredit has rallied as Germany rejected the Italian lender's takeover bid for Commerzbank. Shares of the latter have also risen.
Swedish defense and aerospace firm Saab has also surged after securing an order for anti-tank weapons system from France's arms procurement authority.
Meanwhile, meat and seafood processor Hilton Food has slumped in London after confirming Mark Allen as group chief executive from July 1.
STMicroelectronics has also slumped after the chipmaker announced plans to offer $1.5 billion of convertible bonds and redeem early $750 million of outstanding convertible bonds due 2027.
U.S. Economic News
The Commerce Department released a report on Tuesday showing a steep drop in new residential construction in the U.S. in the month of May.
The report said housing starts plummeted by 15.4 percent to an annual rate of 1.177 million in May after plunging by 8.5 percent to a revised rate of 1.392 million in April.
Economists had expected housing starts to slump by 2.4 percent to an annual rate of 1.430 million from the 1.465 million originally reported for the previous month.
The Commerce Department said building permits also slid by 0.7 percent to an annual rate of 1.413 million in May after surging by 4.4 percent to a revised rate of 1.432 million in April.
Building permits, an indicator of future housing demand, were expected to tumble by 1.5 percent to an annual rate of 1.420 million from the 1.442 million originally reported for the previous month.
A separate report released by the Labor Department on Tuesday showed import prices in the U.S. shot up by much more than expected in the month of May.
The Labor Department said import prices jumped by 1.9 percent in May after leaping by an upwardly revised 2.0 percent in April.
Economists had expected import prices to increase by 1.0 percent compared to the 1.9 percent jump originally reported for the previous month.
The report said export prices also shot up by 1.3 percent in May after spiking by an upwardly revised 3.5 percent in April.
Export prices were expected to jump by 1.2 percent compared to the 3.3 percent surge originally reported for the previous month.
At 1 pm ET, the Treasury Department is scheduled to announce the results of this month's auction of $13 billion worth of twenty-year bonds.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.