U.S. stock futures advanced on Sunday, extending a bullish sentiment from late last week after President Donald Trump pulled back from a major military strike against Iran.

Futures linked to the Dow Jones Industrial Average climbed 189 points, or 0.36%. S&P 500 futures rose 0.41%, while Nasdaq futures gained 0.89%.

South Korea's Kospi index, which has emerged as a bellwether for global equities in recent weeks, surged 18% on Friday—its largest single-day gain on record. The rally suggests Korean investors may be re-entering the market following a severe selloff last month that led authorities to clamp down on the heavy leverage driving earlier volatility.

Oil prices fell sharply on expectations of a diplomatic agreement to reopen the Strait of Hormuz, a chokepoint through which roughly a fifth of global oil consumption transits daily. U.S. crude dropped 4.5% to $80.85 a barrel, and Brent crude declined 4.6% to $83.90. The U.S. 10-year Treasury yield slipped 2.7 basis points to 4.718%.

In a now-familiar pattern during the Iran conflict, Trump once again threatened a large-scale attack before reversing course late Saturday. While the president attributed his latest decision to U.S. allies urging another attempt at diplomacy, analysts also point to growing indications that Iran is gaining the strategic upper hand.

Tehran has leveraged proxy forces to broaden the conflict across the region, most prominently with Houthi rebels threatening commercial vessels in the Red Sea attempting to transit the Bab el-Mandeb Strait as an alternative to the Strait of Hormuz. Iran has also warned its Persian Gulf neighbors that they would become targets in the event of renewed bombardment, after demonstrating that its long-range weapons can penetrate U.S. air defenses.

"Last night's events underscore a reality that is becoming increasingly difficult to ignore: for now, Iran appears to hold the strategic advantage in deterrence," Dennis Citrinowicz, a former Israeli intelligence official who specialized in Iran, posted on X.

Wall Street is also turning its attention to a slate of labor market data in the week ahead, amid mounting doubts about the Federal Reserve's resolve to contain inflation.

ADP's private payrolls report is scheduled for release on Wednesday, followed by the Labor Department's weekly jobless claims on Thursday. On Friday, the Labor Department will publish its monthly jobs report, with analysts forecasting a gain of 85,000 jobs and the unemployment rate edging up to 4.3% from 4.2%.

The figures follow Fed Chairman Kevin Warsh's delivery of a "credibility shock" last week, when he again provided no forward guidance while suggesting that alternative data and market instruments could be deployed to combat inflation.

Economists at Bank of America said the remarks were sufficiently dovish that they will likely compel a hawkish response, meaning other members of the rate-setting Federal Open Market Committee will need to compensate.

Friday's payroll data will serve as a critical test. Strong evidence of a resilient labor market could intensify concerns about persistent inflation. Bank of America cited the bond yield curve as a barometer of the central bank's perceived commitment to price stability.

"Flattening of the curve would mean markets still believe the Fed will do what it takes to meet its mandate," the economists said. "But if the curve were to steepen on strong jobs/inflation data, that would indicate the Fed is behind the curve, raising more serious questions about its credibility."