Wall Street futures fell on Monday after weekend negotiations between the United States and Iran failed to produce a ceasefire deal, though losses remained more contained than the gravity of the conflict might suggest.
Oil climbed back above $100 a barrel whilst the US dollar surged sharply, as investors weighed the possibility of a naval blockade of Iranian ports that American military forces were reportedly hours away from initiating.
5 things to know before Wall Street opens
1. Futures point lower as Iran talks stall
Dow Jones Industrial Average futures trimmed earlier losses but remained lower, falling 256 points, or 0.5%. S&P 500 futures declined 0.55%, while Nasdaq 100 futures slipped 0.6%.
US military forces were reported to be hours away from initiating a blockade of all maritime traffic entering or leaving Iranian ports.
2. Ceasefire expires with no progress
Last week’s ceasefire remains in limbo without any tangible progress in diplomatic talks between Washington and Tehran.
The probability of sustained conflict in the region remains elevated, pushing investors toward a more defensive posture.
“For the Iranians who up to now have felt that time is on their side, it puts pressure on their allies to encourage Iran to come to the table to make a deal,” said Richard de Chazal, macro analyst at William Blair in Chicago.
3. Oil tops $100, stoking fresh inflation fears
Crude oil edged back above $100 a barrel on Monday after touching 26-month highs in prior sessions.
The surge in fuel costs pushed consumer prices up by their largest margin in nearly four years in March, reigniting concerns over inflation and raising the prospect of a tighter monetary policy response from the Federal Reserve.
4. Dollar rallies; travel stocks slide, energy gains
Investors rotated sharply into the US dollar and out of equities in a textbook risk-off move.
Travel-related stocks were among the hardest hit, with Delta Air Lines falling 2.2% and JetBlue Airways sliding 3.8% in premarket trade after both carriers warned that elevated fuel costs would force them to raise airfares.
Energy stocks moved in the opposite direction — Chevron, Exxon Mobil, and ConocoPhillips each gained more than 2% on the back of rising oil prices.
5. Goldman Sachs earnings open the US reporting season
Markets will be closely watching results from Goldman Sachs, which kicks off the US earnings season on Monday.
Shares of Goldman edged marginally higher in premarket trading, outperforming many of its peers on Wall Street.
Investors will be listening closely to management commentary on the economic impact of seven weeks of Middle East hostilities.
Oil prices and Goldman’s early quarterly views will be the key factors in determining whether markets continue to price in geopolitical risk premiums — or whether corporate earnings can reassert themselves as the dominant narrative.
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