Stock market futures fell on Monday morning as investors grappled with climbing Treasury bond yields and rising oil costs, while looking ahead to major corporate earnings announcements later this week.
The 10-year Treasury yield, which has an inverse relationship with bond prices, climbed as high as 4.631% during early trading – marking its peak level since February 2025 – before pulling back slightly to 4.607%.
Bond market selling intensified due to surging oil prices, raising worries that inflation might keep interest rates high for an extended period. Brent crude was trading at $110.66 per barrel following setbacks in efforts to resolve the Iran conflict after a drone attack on a nuclear facility in the United Arab Emirates.
“The concern for investors is that higher yields do not stay confined to bond markets. They can weigh on equity valuations, particularly in growth and technology sectors, while also increasing pressure on governments carrying large debt burdens,” said Lale Akoner, global market strategist at eToro.
Stock markets had experienced significant gains in recent weeks, with both the S&P 500 and the technology-focused Nasdaq hitting new record levels as excitement about artificial intelligence helped investors overlook inflation concerns stemming from climbing oil prices.
However, that positive sentiment diminished following Friday’s bond market decline. Market participants now see more than a 40% probability that the Federal Reserve will increase interest rates in January, based on CME’s FedWatch tool, following last week’s inflation data that came in higher than anticipated.
As of 7:19 a.m. Eastern Time, Dow futures had dropped 322 points or 0.65%, S&P 500 futures were down 30.5 points or 0.41%, and Nasdaq 100 futures fell 112 points or 0.38%.
Market watchers will also focus on the Federal Reserve’s meeting minutes, scheduled for release on Wednesday, along with leadership changes at the central bank as former Governor Kevin Warsh prepares to take over as chair. He faces an early challenge in managing the White House’s push for lower interest rates while dealing with more aggressive stances from Fed officials.
Company earnings reports represent another critical factor for markets. The world’s most valuable company, which is set to announce results on Wednesday, comes as a robust first-quarter earnings period nears its end.
Market expectations are elevated for the company, whose stock has gained 36% since its March bottom, while the Philadelphia SE Semiconductor Index has jumped more than 60% this year driven by strong appetite for AI-related semiconductor products.
The world’s largest retailer is also scheduled to release earnings this week, potentially providing insights into how American consumers are managing higher energy costs and broader inflation challenges.
In premarket trading Monday, Dominion Energy shares surged 14.2% following a Bloomberg News report that power company NextEra Energy was in talks for a primarily stock-based acquisition of the smaller utility, valuing it at approximately $76 per share or roughly $66 billion.
UnitedHealth Group dropped 4.7% after Berkshire Hathaway disclosed it had sold many of its smaller equity positions, including shares in the health insurance company.
Regeneron stock tumbled 11.8% after the pharmaceutical company’s experimental therapy failed to achieve its primary objective in a late-stage study involving patients with advanced melanoma, a form of skin cancer.
