Stock market futures dropped significantly Friday morning as concerns about rising inflation linked to Middle East conflicts sent Treasury yields soaring and threatened to derail the recent technology-driven market surge.
Futures contracts for both the technology-heavy index and the broader market index fell more than 1% in pre-market trading, signaling potential trouble for the artificial intelligence boom that has powered recent gains.
The 10-year Treasury note yield climbed to 4.54%, marking its highest point since early June 2025. This benchmark rate influences borrowing costs worldwide and reflects growing investor anxiety about economic conditions.
Bond yields worldwide rose as mounting evidence of economic harm from the Iran war led traders to expect faster interest rate increases and slower economic growth ahead.
Market data shows the probability of the U.S. Federal Reserve raising rates by 25 basis points in December has more than doubled in the past week, now standing at approximately 40% according to the CMEGroup’s Fedwatch tool.
Oil prices surged nearly 3% to $109 per barrel as the Strait of Hormuz remained blocked, creating fresh worries about global energy supply disruptions.
“The longer the Middle East war drags on, the higher energy prices rise – fuelling inflation expectations and borrowing costs, and increasing the cost of building that extra data center,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“This is a red flag that many tech investors have been ignoring, blinded by shiny earnings and even shinier earnings expectations.”
Early trading data at 05:38 a.m. ET showed the industrial average futures down 330 points or 0.66%, while the broader market index futures declined 80.75 points or 1.07%. Technology futures dropped 463.25 points or 1.56%.
This downturn comes after another day of record-breaking performance on Wall Street, where both major indexes reached new all-time highs. The industrial average crossed the 50,000 mark again, while the broader index surpassed 7,500 for the first time.
Earlier in the week, markets had seemed to brush aside inflation worries connected to the Iran conflict, with artificial intelligence excitement driving continued gains and keeping major indexes positioned for weekly increases.
Traders also monitored the conclusion of the U.S.-China summit on Friday, which ended without significant progress after talks covering topics including trade, tariffs, Iran and Taiwan.
In pre-market individual stock movement, semiconductor equipment manufacturer Applied Materials dropped 2.8% despite projecting third-quarter revenue and adjusted earnings above analyst expectations.
Medical device company Dexcom rose 2% after announcing plans to add two independent board members and restructure a key committee in partnership with activist investor Elliott Investment Management.
Airline stocks declined broadly as climbing oil prices pressured the industry, with Delta Air Lines, United Airlines and Southwest Airlines falling between 1.3% and 1.5%, while Alaska Air shares dropped 1.8%.
