U.S. Futures Drift Lower as Iran Standoff and Inflation Concerns Weigh on Markets: Dow Jones, S&P, Nasdaq, Wall Street
U.S. stock futures edged lower on Tuesday as investors monitored mounting uncertainty surrounding the conflict between the United States and Iran, while also preparing for the release of closely watched U.S. inflation data.
By 03:28 ET, Dow Jones futures were down 71 points, or 0.1%. S&P 500 futures declined 25 points, or 0.3%, while Nasdaq 100 futures fell 193 points, or 0.7%.
Wall Street ended Monday’s session modestly higher, supported largely by continued gains in semiconductor and artificial intelligence-linked stocks. Enthusiasm surrounding AI-related companies has remained resilient despite ongoing geopolitical tensions.
However, analysts at Vital Knowledge suggested broader market performance appeared less convincing beneath the surface.
“[W]e continue to think the price action in chips/components is extremely extended and unsustainable while an Iran deal, to the extent one arrives, is more likely to trigger a sell-the-news response than spur material additional gains (since it’s already assumed that an agreement will be struck),” the firm said in a note.
The analysts also pointed out that the equal-weighted S&P 500 underperformed during Monday’s session, while government bond yields and oil prices continued climbing.
Washington and Tehran Remain at an Impasse
Hopes for a near-term diplomatic breakthrough weakened after comments from U.S. President Donald Trump suggested negotiations with Iran had stalled.
Speaking to reporters on Monday, Trump said the ceasefire between Washington and Tehran was on “massive life support” following his rejection of Iran’s latest response to a U.S.-backed peace proposal.
Trump described the Iranian counterproposal as “unacceptable” before later calling it “a piece of garbage,” adding that he did not believe it was even worth reading in full.
At the same time, reports suggested the risk of renewed military escalation may be increasing. According to CNN, Trump is now seriously considering restarting large-scale combat operations as frustration grows over slow-moving negotiations.
Some analysts have speculated that Trump’s upcoming visit to China and expected meeting with Chinese President Xi Jinping could potentially help revive discussions. China remains one of the largest importers of Iranian crude oil and could play a role in supporting any future peace arrangement.
For now, however, uncertainty surrounding the conflict continues to cloud the global economic outlook.
Oil Prices Climb Back Above $105
Energy markets reacted sharply to the latest developments, with oil prices extending recent gains.
Brent crude futures rose 2.0% to $106.30 per barrel, remaining well above levels near $70 seen before the outbreak of conflict earlier this year.
Oil prices have surged largely because of ongoing disruption around the Strait of Hormuz, the strategically important shipping route off Iran’s southern coast through which roughly one-fifth of global oil supplies normally pass.
The waterway has effectively remained blocked by both U.S. and Iranian military activity for weeks, disrupting crude shipments and increasing fears of a wider energy supply crisis.
Trump’s latest remarks reinforced market concerns that a resolution may not arrive anytime soon, further supporting higher energy prices.
Markets Await Key U.S. Inflation Data
The continued rise in oil prices has renewed concerns about inflation and raised expectations that central banks could maintain tighter monetary policy for longer.
Investors are now focusing on upcoming U.S. consumer price index data, due later on Tuesday.
Economists expect headline inflation for April to accelerate to 3.7% year-on-year, up from 3.3% in March, largely because of rising gasoline prices. On a monthly basis, CPI growth is forecast to slow to 0.6% from 0.9%.
Markets will also closely monitor core inflation, which excludes food and energy prices and is viewed as a key measure for the Federal Reserve. Core CPI is expected to come in at 2.7% annually and 0.3% month-on-month, compared with 2.6% and 0.2% respectively in the previous reading.
The core measure is “ultimately what matters most” for the Federal Reserve, strategists at ING said in a note.
“Still, it is probably too early to expect clear evidence of second round effects,” they added.
Republican Lawmakers Scrutinize Sam Altman’s Business Activities
Meanwhile, Sam Altman is reportedly facing increased scrutiny from Republican lawmakers and several Republican state attorneys general ahead of a potential stock market listing for OpenAI later this year.
According to a report from the Wall Street Journal, the Republican-led House Oversight Committee has opened an investigation into possible conflicts of interest involving Altman’s personal investments and OpenAI’s commercial partnerships.
The committee has reportedly requested documents related to OpenAI’s governance practices and its relationships with companies connected to Altman.
The newspaper also reported that Republican attorneys general from Florida, Montana, Nebraska, Iowa, West Virginia and Louisiana have urged the U.S. Securities and Exchange Commission to review OpenAI’s governance structure before any initial public offering proceeds.
The scrutiny follows earlier reports that Altman had encouraged OpenAI to support businesses in which he held personal investments, including nuclear fusion company Helion and aerospace startup Stoke Space.