Dow futures rise 120 points: 5 things to know before market opens

US equity futures pointed to a firmer open on Thursday, with all three major index contracts trading in positive territory ahead of the New York session.

S&P 500 and Nasdaq 100 futures edged higher, while Dow futures rose about 120 points, or roughly 0.24%, in early trade.

The advance was underpinned by a confluence of forces: a nascent diplomatic opening between Washington and Tehran, a meaningful pullback in crude oil, and an earnings season that continues to exceed Wall Street's expectations.

Investors were also squaring positions ahead of closely watched US employment data due on Friday, a report that could sharpen the Federal Reserve's thinking on the pace and timing of any future rate moves.

5 things to know before Wall Street opens

1. Iran-US talks edge closer to a deal

Tehran confirmed on Wednesday it is reviewing a US peace proposal that, according to officials who briefed the BBC, centres on a one-page memorandum of understanding.

The document would provide for the gradual reopening of the Strait of Hormuz — a critical artery for global oil shipments — and the lifting of a US naval blockade on key Iranian ports, with talks on Tehran's nuclear programme to follow in later stages.

Iran has not accepted the proposal, but its willingness to study the terms represents a meaningful shift in tone.

2. Oil falls sharply, easing inflation pressure

The prospect of renewed Hormuz access has sent crude prices lower, offering a measure of relief to an economy that has been grappling with elevated energy costs since the Middle East conflict began in late February.

Lower oil prices feed through to consumer inflation relatively quickly and, if sustained, could give the Federal Reserve more room to manoeuvre on rates.

However, Chicago Fed President Austan Goolsbee offered a note of caution, saying inflation "still is a long way from" the Fed's 2% target.

3. Earnings season remains exceptionally strong

With roughly 71% of S&P 500 companies having reported for the most recent quarter, approximately 84% have come in above analyst expectations, a beat rate that comfortably exceeds the historical average.

Technology and artificial intelligence-linked names have led the advance, with Alphabet, Amazon and Meta all delivering results that surpassed consensus forecasts.

4. Disney surges; McDonald's, Gilead and Airbnb due

Walt Disney was one of the standout movers in early trade, with its shares rising as much as 7.5% after the entertainment group posted quarterly revenue of $25 billion alongside adjusted earnings per share of $1.57, up 7% year on year.

The results underscored the continued recovery in theme parks and streaming.

Attention now turns to a second wave of reporters due Thursday, with McDonald's, Gilead Sciences and Airbnb all scheduled to publish results.

5. Jobs data are the session's pivot points

US non-farm payrolls data, due on Friday, represents the most significant scheduled release of the week.

A labour market cooling too quickly could reignite fears of a growth slowdown; one that remains too robust risks cementing the case for a prolonged pause on rates.