Wall Street Futures Retreat as Rising Oil Prices and Geopolitical Risks Cloud Outlook: Dow Jones, S&P, Nasdaq

Markets Prepare for a Cautious Start

U.S. equity futures pointed to a weaker open on Monday, with investors expected to trim risk after last week’s gains as renewed conflict in the Middle East pushed oil prices sharply higher.

The latest escalation between the United States and Iran has revived concerns over global energy supplies, creating fresh uncertainty for financial markets at the start of the week.

Oil Extends Rally

Crude prices advanced after the U.S. Central Command confirmed it had carried out another series of precision strikes against Iranian targets on Sunday.

Iran responded with attacks on several Gulf countries, including Bahrain, Kuwait, Qatar, Jordan and Oman, increasing fears that regional instability could spread further.

Conflicting statements from Washington and Tehran regarding the status of the Strait of Hormuz also added to market volatility, helping lift U.S. crude futures by more than 4%.

Semiconductor Shares Under Pressure

Technology stocks were also expected to weigh on sentiment following a sharp decline in SK Hynix (USOTC:HXSCL).

The South Korean chipmaker’s U.S.-listed shares dropped more than 9% in premarket trading after surging over 13% during Friday’s Nasdaq debut, dragging broader semiconductor stocks lower.

Focus Turns to Earnings and Inflation

Investors are now looking ahead to a busy week of corporate earnings and important economic data that could determine the market’s next direction.

Results are due from Bank of America (NYSE:BAC), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), Johnson & Johnson (NYSE:JNJ), UnitedHealth (NYSE:UNH) and Netflix (NASDAQ:NFLX).

At the same time, markets are awaiting fresh U.S. inflation figures that may influence expectations for the Federal Reserve’s upcoming policy meeting.

Daniela Hathorn, Senior Market Analyst at Capital.com, said, “Following stronger inflation readings earlier this year and a resilient labour market, investors are keen to determine whether underlying price pressures remain persistent despite the recent fall in energy prices.”

She added, “A hotter-than-expected reading would reinforce the higher-for-longer narrative and could add further support to the dollar and bond yields. Conversely, a softer report would help offset some of the inflation concerns stemming from renewed geopolitical tensions and could provide equities with a much-needed boost.”

Strong Weekly Performance Provides Support

Despite Friday’s relatively subdued trading session, the major U.S. indices finished higher.

The Dow Jones rose 0.3%, the Nasdaq gained 0.3% and the S&P 500 added 0.4%. Over the full week, the Nasdaq climbed 1.7%, while the S&P 500 and Dow Jones advanced 1.2% and 0.5%, respectively.

Meta Platforms (META) led technology gains after Bank of America reaffirmed its Buy rating, while Nvidia (NASDAQ:NVDA) rose 4%. SK Hynix also impressed investors with a 13.1% gain during its first U.S. trading session.

Sector Performance Diverges

Biotechnology stocks were among Friday’s weakest performers, with the NYSE Arca Biotechnology Index falling 2.6%.

Airline shares also struggled, while housing and oil service companies outperformed, supported by strength in the property market and energy sector.