U.S. stock futures declined during Asian trading on Tuesday after Wall Street ended Monday’s session lower, as renewed tensions between the United States and Iran pushed oil prices higher and revived concerns over inflation.
S&P 500 futures fell 0.4%, while Nasdaq 100 futures dropped around 0.8%. Dow Jones futures declined 0.1%.
The moves followed a weak session on Wall Street, where the Dow Jones Industrial Average fell 0.5%, the S&P 500 declined around 0.5%, and the Nasdaq Composite lost 0.3%.
Energy was the only major sector within the S&P 500 to post gains, rising 0.9% as crude oil prices climbed by more than $2 per barrel. Most other sectors moved lower, with communication services and consumer staples among the biggest decliners.
Oil related developments remained the main driver of market sentiment as investors assessed the risk of further escalation in the conflict between the United States and Iran.
Brent crude extended its gains and moved above $91 per barrel as concerns over global energy supplies intensified.
Uncertainty increased after U.S. President Donald Trump threatened military action against Oman if the country interfered with American efforts to reach an agreement with Iran. The comments added to concerns surrounding the Strait of Hormuz, one of the world’s most important routes for global oil shipments.
Iranian media also reported that Iran had seized an oil tanker owned by an Emirati company.
Higher oil prices also pushed U.S. Treasury yields upward, with the 30 year yield closing at 5.31%, its highest level in nearly two decades. Rising energy costs have revived concerns that inflationary pressures could return, potentially complicating the Federal Reserve’s monetary policy outlook.
Investors are also focused on earnings reports from major U.S. retailers this week, including Walmart, Home Depot and Target, as they look for fresh signals on the strength of American consumers following data showing that retail sales and employment growth in July were weaker than expected.
Attention will also turn to the Federal Reserve meeting minutes scheduled for release on Wednesday, with investors seeking further clues about the debate within the central bank over interest rates. The Federal Reserve kept its benchmark interest rate unchanged within a range of 3.50% to 3.75% at its July 28 and 29 meeting, although the decision revealed divisions among policymakers, with three officials voting in favor of an interest rate increase.
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