Stock index futures pointed to a lower opening on Wall Street Monday after the United States and Iran traded attacks in the Gulf, with Tehran claiming it had sealed off the Strait of Hormuz — a crucial artery for the world’s oil supply.
The renewed hostilities shook investor confidence and sent crude futures climbing more than 2%, while technology stocks bore the brunt of the selling pressure in premarket trading.
The latest flare-up cast serious doubt on an interim agreement the two countries had reached last month, which was intended to reopen the strait and wind down hostilities following 60 days of negotiations.
Semiconductor companies were among the hardest hit. Micron Technology dropped 5.2% before the opening bell, while Western Digital fell 6%, Seagate slid 4.8%, and Sandisk lost 6.6%. U.S.-listed shares of SK Hynix tumbled 9.3%, just days after the company made a high-profile debut on the Nasdaq last Friday. The iShares semiconductor ETF declined 2.7%.
Kathleen Brooks, research director at XTB, explained the market dynamic: “U.S. futures are pointing to a lower open later today. This suggests that the rise in geopolitical tensions and the spike in the oil price are disrupting the momentum trade once again, which will hit the tech trade and the chip stock rally.”
As of 5:14 a.m. ET, Dow E-minis were up a modest 28 points, or 0.05%, while S&P 500 E-minis were off 23.5 points, or 0.31%. Nasdaq 100 E-minis were down 303.75 points, representing a decline of 1.01%.
For context, the Dow Jones Industrial Average closed up 0.29% at 52,637.01 on Friday, and the futures contract remained 0.56% above that closing level.
Despite Monday’s jitters, the S&P 500 has gained more than 10% so far this year and sits less than 1% beneath its record closing high set in early June. The index logged back-to-back weekly gains last week, weathering turbulence in chip stocks and earlier U.S.-Iran tensions.
The week ahead is packed with potential market-moving events. Several of the country’s largest financial institutions — including JPMorgan Chase, Goldman Sachs, and Morgan Stanley — are set to report second-quarter results. Netflix, General Electric, and UnitedHealth are also scheduled to release earnings. According to LSEG IBES, S&P 500 profits are forecast to rise 23.7% compared to the same period a year ago.
Investors will also be watching a series of key economic reports. Tuesday brings the U.S. consumer price index, an inflation gauge that could reshape expectations around interest rate policy. Producer price data is due Wednesday, followed by monthly retail sales figures on Thursday.
Also on Tuesday, Fed Chair Kevin Warsh is expected to deliver his first monetary policy testimony before Congress. Fed Governor Christopher Waller is scheduled to speak Monday on the economic outlook.
According to LSEG data, markets are currently pricing in at least one 25-basis-point interest rate increase before the end of the year.
