Pre-Market Update: Stocks Fall as Oil Hits $110 and Iran Tensions Fuel Inflation Fears

TLDR

• US stock futures fell Monday, with the Dow down over 300 points in pre-market trading
• Brent crude topped $110 a barrel as US-Iran peace talks stalled
• The 10-year Treasury yield climbed to 4.61%, raising fears of a Fed rate hike
• Traders now see a 54% chance the Fed raises rates at least once by year-end, up from under 1% a week ago
• Nvidia earnings on Wednesday are seen as the key event that could shift market sentiment

US stock futures dropped on Monday morning as investors grew more nervous about inflation. The Dow Jones Industrial Average futures fell around 334 points, or 0.6%. S&P 500 futures slid 0.3%, and Nasdaq 100 futures dropped 0.2%.

The losses follow a sharp sell-off on Friday, driven by rising Treasury yields. All three major indexes are now pulling back from recent record highs.

The 10-year Treasury yield climbed to 4.61% on Monday. That is putting pressure on stocks, as higher yields make borrowing more expensive and can weigh on company profits.

Oil prices pushed higher too. Brent crude futures rose to $110.25 a barrel, up 0.9%. West Texas Intermediate climbed 1.3% to $106.80 a barrel.

The oil price surge is tied directly to the ongoing US-Iran standoff. Shipping through the Strait of Hormuz remains disrupted. That is raising fears that energy costs could keep inflation elevated.

Iran Tensions Push Fed Rate Hike Back Into Focus

Markets reacted quickly. Traders now price in a 54% chance the Federal Reserve raises interest rates at least once before the end of 2026, according to the CME FedWatch tool. Just one week ago, those odds were below 1%.

New Fed Chair Kevin Warsh is now seen as potentially having to raise rates rather than cut them. That is a sharp reversal from what markets had been expecting just days ago.

Bond markets are already repricing. Yields are drifting higher, which is putting further pressure on equities.

Retail earnings from Target and Walmart later this week will give investors a clearer picture of how consumers are holding up under the pressure of higher prices.

All eyes, though, are on Nvidia. The chipmaker reports first-quarter earnings on Wednesday. Given its role as a bellwether for the artificial intelligence trade, its results could shift the mood on Wall Street, at least in the short term.

For now, markets remain on edge. Oil above $110, rising yields, and no clear end to the Iran conflict are keeping buyers on the sidelines.

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