Four things to know ahead of the U.S. stock-market open on Tuesday

Markets are reacting to a de-escalation in Middle East tensions, pushing stock futures higher and oil lower, even as the ceasefire remains fragile. Investors are keenly awaiting Fed Chair Powell's Capitol Hill testimony for cues on interest rate policy, especially after recent dovish comments from colleagues and presidential pressure for cuts. Meanwhile, the U.S. housing market continues to show weakness, with KB Home trimming its revenue forecast due to high mortgage rates and planning reduced land investments. Economic bellwether FedEx is also set to report earnings post-market, offering further insight into the broader economic landscape.

Analysis

The market is exhibiting cautious optimism ahead of the open, with stock futures rising and oil futures declining in response to a formally announced ceasefire between Iran and Israel. However, this geopolitical de-escalation is highly fragile, as reports of continued Iranian missile launches and Israeli retaliation threats introduce significant headline risk. Domestically, the primary focus is on Federal Reserve Chair Jerome Powell's testimony, where investor expectations for dovish signals have been amplified by recent calls for rate cuts from other Fed officials and direct pressure from the White House. On the corporate front, clear signs of economic strain are emerging from the interest-rate-sensitive housing sector, evidenced by KB Home (KBH) trimming its full-year revenue forecast and reducing land investment due to high mortgage rates. Further insight into the broader economic health is anticipated after the close with results from economic bellwether FedEx (FDX), which will be closely watched for signs of slowing global trade.

Key Decisions for Investors

• Closely monitor Fed Chair Powell's testimony for any signals regarding the timing of interest-rate cuts, as his comments will likely be the primary market driver and could significantly impact yields and rate-sensitive sectors.
• Despite the market's positive reaction, the Iran-Israel ceasefire remains tenuous; investors should be cautious of a potential reversal in oil prices and equity futures if geopolitical tensions escalate.
• Consider the negative guidance from KB Home (KBH) as a bearish indicator for the residential construction sector, and watch FedEx's (FDX) post-market earnings report as a key bellwether for global economic activity.