US stock futures tumbled on Monday while oil prices surged after military strikes by the US and Israel on Iran were followed by counterattacks, sending shockwaves through global markets.
Dow Jones Industrial Average futures (YM=F) slumped 1.2%, or over 500 points. Contracts on the S&P 500 (ES=F) sank 1.1%, while those on the tech-heavy Nasdaq 100 (NQ=F) dived 1.4% as the escalating Middle East conflict spurred a retreat from risk assets.
The impact on oil prices, and in turn on inflation, is front of mind for investors already uneasy about the backdrop for stocks. The S&P 500 (^GSPC) closed February in negative territory after renewed volatility in AI and software names rattled markets.
Oil prices jumped Monday, with Brent crude futures (BZ=F) surging as much as 13% to top $82 a barrel but moderating gains to slip below $80 at last check. West Texas Intermediate futures (CL=F) traded just below $73, up around 8%. While Iran is OPEC’s fourth-largest producer, markets are also bracing for sustained disruption in the key Strait of Hormuz, where tanker traffic is at a standstill.
Shares in energy major Exxon (XOM) popped in premarket. while defense stocks including Lockheed Martin (LMT) also found buyers. But travel-linked stocks fell, with Delta Air Lines (DAL) sliding nearly 6% in the fallout.
Elsewhere in markets, gold (GC=F) jumped to top $5,400 an ounce, even as the dollar (DX-Y.NYB) rose, as JPMorgan said it expects a “risk premium” gain of up to 10% for the precious metal. Treasury yields (^TNX) moved higher as markets cut back bets on interest-rate cuts on the prospect of hotter inflation.
The next key input into those rate calculations comes Friday, with the release of the monthly jobs report. Economists expect US payrolls to have added 60,000 jobs in February, down from January’s stronger-than-expected 130,000 gain that eased recession fears.
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Norwegian Cruise Line Holdings Ltd. (NCLH) stock fell 7% before the bell on Monday. The cruise line released its fourth quarter earnings, and despite beating analyst estimates, the group’s stock fell as investors worried about the rise of oil prices driving up fuel costs. Royal Caribbean (RCL) shares also fell 5% during premarket hours today.
Berkshire Hathaway’s (BRK-B) stock fell 1% during premarket hours following the release of its fourth quarter earnings on Saturday. Berkshire’s operating profit after taxes fell 30% from a year ago.
American Airlines’ (AAL) stock fell 5% before the bell on Monday, as the rise in oil prices caused worry among investors that fuel costs would increase.
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Gold futures (GC=F) rose on Monday, trading above $5,400 per ounce as the ongoing conflict in the Middle East caused investors to move toward safe-haven assets.
Yahoo Finance’s Ines Ferré reports:
Read more here.
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The 10-year Treasury yield is rising alongside those for US bonds more broadly, even as the spiraling US-Iran conflict sparks a risk-off mood in markets.
From Bloomberg:
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The dollar (DX=F) rose against other currencies as high oil prices led investors to think the Federal Reserve won’t cut rates soon.
Bloomberg News reports:
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Tesla (TSLA) gained market share again in France and Norway in February, according to official data, in a sign of stabilization in Europe after two years of declining sales. Tesla stock fell 2% before the bell on Monday.
Reuters reports:
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Airline, hotel, and defense stocks all rose Monday as investors began to react to the Iran conflict. Lockheed Martin (LMT) shares rose 7% before the bell on Monday, alongside RTX (RTX). BAE Systems’ (BA.L) London shares were up 5%.
Energy companies also saw their stocks jump, with New Fortress Energy (NFE) shares rising 15% in premarket trading. oil major Equinor ASA (EQNR) rose 4%.
Bloomberg News reports:
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Gold (GC=F) prices catching a strong bid this morning to over $5,400 an ounce.
Helpful chart from JPMorgan showing how gold prices have reacted around prior Middle East conflicts:
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The JPMorgan team sees upside potential for oil (CL=F, BZ=F) prices to $120 a barrel if the war spreads throughout the Middle East:
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No surprise here, some of the most visited ticker pages on Yahoo Finance this morning include Exxon Mobil (XOM), Lockheed Martin (LMT), Chevron (CVX) and Occidental Petroleum (OXY).
You can check out the full list of names here.
Some helpful charts from EvercoreISI on the exposures for the oil majors.
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Oil (CL=F, BZ=F) prices have surged this morning post the launch of the US attacks on Iran.
Goldman thinks a good deal of upside may be left for prices:
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How Goldman is thinking about the markets in the wake of the US attacks against Iran:
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President Trump said on Sunday that the bombing against Iran will continue for several weeks and called for Tehran’s leaders to surrender. But Iran’s security chief said it has no intention of negotiating with the US.
Blasts continued across Bahrain, Kuwait, the United Arab Emirates, and Qatar, as the Gulf states intercepted missiles launched by Iran in retaliation for the US-Israeli strikes, showing the war is spreading beyond Iran’s borders. The conflict has entered its third day since US-Israeli forces began airstrikes against Iran over the weekend.
Trump is calling on Iran’s leaders to hand power to the nation’s people, and The Atlantic said Trump has agreed to speak with Iran’s new leadership.
Bloomberg News reports:
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Yahoo Finance’s Ines Ferré reports:
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Bloomberg reports:
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Yahoo Finance’s Jake Conley reports:
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