Dow, S&P 500, Nasdaq futures drop as Hormuz tensions escalate
US stock futures declined on Monday after the US and Iran failed to reach an agreement, while Washington announced a move to block maritime traffic through the Strait of Hormuz.
Last week, optimism around a temporary ceasefire had driven a strong rally, News.Az reports, citing foreign media.
The S&P 500 (^GSPC) posted a gain of about 3.6%, while the Nasdaq (^IXIC) rose nearly 4.7% and the Dow (^DJI) added 3%, marking their best weekly performances since November.
Bucking hopes for a cessation in hostilities following peace talks over the weekend, US President Donald Trump announced in a post on Truth Social that the US Navy would begin the process of “blockading any and all ships trying to enter or leave the Strait of Hormuz.”
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Futures tied to the Dow Jones Industrial Average (YM=F) fell about 0.6%, pointing to a drop of more than 580 points at the open. Contracts on the S&P 500 (ES=F) and Nasdaq 100 (NQ=F) also declined 0.7% and 0.8%, respectively.
The announcement followed a meeting in Islamabad, where American officials, including Vice President JD Vance, reportedly left without an agreement. Disputes extended beyond Iran to broader demands, including control over the strait, financial reparations, and a halt to Israeli attacks in Lebanon.
Markets reacted swiftly to the lack of resolution. US crude benchmark West Texas Intermediate (CL=F) surged more than 8% to above $104 per barrel, while Brent (BZ=F) crude rose 7.5%, raising concerns about renewed inflationary pressure and a potential drag on global growth.
Attention now turns to the start of first-quarter earnings season, with US banks set to begin reporting Q1 results. Goldman Sachs will kick things off on Monday, followed by Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, and Morgan Stanley throughout the week.