Markets thought a deal was coming. It did not come. Futures are lower Monday morning and the optimism that built up over the past week is taking a hit.
Futures Started the Week in the Red
S&P 500 futures dropped 0.5% early Monday. Nasdaq futures fell 0.6%. Dow futures were down roughly 190 points. Not a collapse but a clear step back from the positive mood that had been building.
Reason is straightforward. US and Iran negotiators met in Switzerland over the weekend. Markets had been expecting a signed agreement. Instead talks ended without a final deal. The breakthrough that traders had been pricing in did not happen.
Days earlier both sides were signaling a deal was close. Markets believed it. Risk assets moved higher. Then Sunday came and the headline was that talks stalled. That kind of whiplash is uncomfortable for investors who had already repositioned based on the positive signals.
What Actually Came Out of Switzerland
Not everything from the weekend was empty. Negotiators did agree on a 60-day ceasefire. There are also plans to set up a committee and a framework aimed at ending hostilities including the situation in Lebanon. That is progress compared to where things were a month ago.
But it is a long way from the full agreement markets were expecting. Ceasefire is not a peace deal. Committee frameworks take time. Sixty days of calm is better than active conflict but it leaves a lot unresolved.
Things got more complicated Sunday when Trump posted on Truth Social warning Iran it would be hit very hard again if Hezbollah kept causing problems. That message landed while negotiations were still ongoing. Iran temporarily paused discussions after the post according to some reports. Other accounts said negotiators only took a short break before continuing. Either way not the kind of confidence building move that helps diplomacy move faster.
Talks are still alive. Just not where markets hoped they would be by now.
Asia Did Not Read the Same Memo
Interesting split in how different markets reacted Monday morning. US futures were down but Asia was doing something different entirely.
Japan’s Nikkei 225 surged 2% and crossed 72,000 for the first time ever. South Korea Kospi added 1.2%. Both markets went up while US futures were going down.
Possible explanation is that Asian markets were reacting more to last week’s strong performance in US equities and less to the specific Iran headline. Or they viewed the 60-day ceasefire as enough of a positive outcome to justify buying. Either way the divergence is notable. Not everyone is reading Monday’s news the same way.
Last Week Was Actually Very Good
Worth stepping back for a moment. Despite all the uncertainty this week is starting from a strong position.
S&P 500 gained 0.9% last week. That was the biggest weekly advance since late May. Year to date gain for the index now sits at 9.6%.
Nasdaq did even better. Up 2.4% last week. Best weekly performance since early May. Now up 14.1% for 2026 overall. Tech and AI momentum has been the consistent driver behind those numbers even through all the volatility around geopolitics and Fed decisions.
Bulls have had a genuinely solid run. Monday’s dip is a setback but it is coming from a position of strength not from a market that was already struggling.
Inflation Data Is the Next Big Thing
Iran talks will keep getting headlines but the next real market moving event is probably Thursday. Core PCE data drops then. That is the Federal Reserve’s preferred inflation measure and the number they watch most closely when making rate decisions.
After last week’s Fed meeting under Kevin Warsh signaled a more hawkish stance the PCE number carries extra weight. If it comes in higher than expected it adds fuel to the rate hike by October story. If it comes in cooler than forecast it takes some pressure off and gives the Fed more reason to pause.
Markets are balancing two things right now. Strong tech and AI momentum that has been pushing indexes higher for most of 2026. And Middle East uncertainty that keeps flaring up at inconvenient moments. Monday morning the uncertainty is winning the early round. Whether it stays that way through the week depends mostly on what happens with both the Iran situation and Thursday’s inflation print.