US stock futures climbed on Monday as Wall Street weighed the likely impact of surging oil prices on the Federal Reserve’s path for interest rates and looked for signs of easing in Strait of Hormuz supply disruption.
Dow Jones Industrial Average futures (YM=F) put on roughly 0.6% on the heels of another weak week for equities. Meanwhile, contracts on the S&P 500 (ES=F) and the tech-heavy Nasdaq 100 (NQ=F) moved up about 0.7% and 0.9%, respectively.
Wall Street is keeping a close watch on developments in the Strait of Hormuz as the Middle East conflict enters its third week. Several tankers successfully transited the waterway at the weekend, injecting some hope into markets that the key conduit for crude supply might reopen. At the same time, President Trump put pressure on allies to join the US in breaking Iran’s blockade of Hormuz, warning NATO faces a “very bad future” if they don’t help.
Oil prices continued their rise as optimism for a reopening remained shaky. Futures for both the US and international crude benchmarks topped $100 a barrel for the first time since 2022 in early trading Monday, before pulling back. West Texas Intermediate (CL=F) was trading at around $97 at last check, down over 1%, while Brent (BZ=F) nudged down to just below $99.
The impact of surging oil prices on inflation is in focus as Federal Reserve officials gather for their two-day policy meeting this week. Uncertainty around the fallout from Iran war is seen as potentially deepening divisions with the central bank over the path forward on interest rates, though officials are expected to leave rates unchanged on Wednesday.
On the corporate front, Nvidia’s (NVDA) annual GTC conference kicks off Monday with a keynote speech from CEO Jensen Huang.
LIVE 9 updates
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Investors may be underpricing the risk of potential growth slowdowns triggered by the economic fallout of the Iran war, Bank of America global economist Antonio Gabriel wrote in a client note Monday morning.
Even as inflation concerns have risen alongside energy prices, which are likely to feed into headline inflation in the coming months, the US dollar has rallied, and US equities are less than 5% off their highs — bets that could be threatened by a drawn-out conflict.
“While a quick resolution to the conflict is certainly [possible], we view the conflict extending into 2Q as an equally likely outcome, and a more protracted war cannot be ruled out,” Gabriel wrote.
“Markets seem to be pricing a largely transitory shock … In our view, the more disruptive scenarios for global growth are underpriced,” he wrote.
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Nvidia’s (NVDA) CEO Jensen Huang will take the stage at the SAP Center in San Jose, Calif., at 2 p.m. ET, kicking off the AI leader’s annual developer conference.
Our tech editor Daniel Howley previews what to expect from Huang’s keynote and the highly anticipated event:
Read the full GTC preview and follow along for live updates from the event.
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Nebius (NBIS) stock soared 14% after the AI cloud company announced it struck a new long-term AI infrastructure supply agreement with Meta (META).
Nebius will provide Meta with $12 billion worth of neocloud capacity as part of its deployment of Nvidia’s Vera Rubin platform, starting in 2027. Meta has also committed to purchasing additional compute capacity up to a total of $15 billion over a five-year period.
Last week, Nvidia disclosed a $2 billion investment in Nebius to deploy more than 5 gigawatts of data center capacity by the end of 2030.
Meta stock rose 2.6% on the Nebius news, as well as rumors that it’s planning sweeping layoffs that could affect up to 20% of the company as it looks to offset high artificial intelligence costs. The date and extent of the layoffs have yet to be finalized, according to Reuters, but it could mark Meta’s largest restructuring since late 2022 and early 2023.
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Yahoo Finance’s Jake Conley takes a look at the pivotal events for markets this week:
Read more here.
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Software is breaking investors’ hearts — again.
Just one week after staging its sharpest rebound in nearly a year, the group has faded again, writes Yahoo Finance’s Jared Blikre:
Read more here.
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I think it’s silly that we have started to see a lot of chatter about potential interest rate hikes from the Federal Reserve this year.
I get it: Oil prices are up 42% since Operation Epic Fury began, and that may feed into inflation. But to think the Fed will hike rates because of this seems rather far-fetched.
Nonetheless, my day started with seeing the below headline from a JPMorgan report.
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A few helpful charts from RBC Capital Markets on the market’s performance during periods of war.
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Some good points from Goldman Sachs this morning on the markets. I think this amounts to a mild call of a near-term correction:
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Bloomberg reports:
Read more here.