Stock futures declined early Tuesday as major averages experienced volatility and traders monitored developments in Iran. President Donald Trump indicated the military campaign in Iran could soon conclude, while oil prices saw a significant correction.
Stock Market Overview
Futures tied to the Dow Jones Industrial Average lost 92 points, or 0.19%. S&P 500 futures fell 0.18%, and Nasdaq 100 futures slid 0.16%.
In regular trading Monday, stocks mounted a substantial comeback. The 30-stock Dow added about 239 points, or 0.5%, recovering from an earlier loss of nearly 900 points. The S&P 500 closed 0.8% higher after falling as much as 1.5% during the session. The Nasdaq Composite similarly reversed course, finishing up nearly 1.4%.
Trump’s Comments and Oil Prices
President Trump stated Monday evening, “We’re achieving major strides toward completing our military objective,” reinforcing earlier comments suggesting the campaign could soon end. Speaking at a press conference, Trump also said, “We are also focused on keeping energy and oil flowing to the world.” He also told CBS News that the U.S. is “very far” ahead of his previously stated timeframe and is “thinking about” taking over the Strait of Hormuz.
Following Trump’s comments, West Texas Intermediate crude fell to $81 a barrel, after briefly surpassing $119 a barrel in overnight trading. Brent crude, the international standard, pulled back to $84 a barrel. Oil prices were last above $100 in 2022, when Russia launched a full-scale invasion of Ukraine.
“This is just a real clear indication that oil’s in the driver’s seat in the near term. Just from peak to trough, in one day, we saw oil prices correct down 30%, and risk assets, and specifically the stock market, rally throughout the news,” said Matt Stucky, Northwestern Mutual chief portfolio manager.
G7 Meeting and Economic Data
Energy ministers from the Group of Seven nations are set to meet virtually Tuesday to discuss a potential release of strategic oil reserves.
Traders are also watching for upcoming inflation data, with February’s consumer price index reading due Wednesday and January’s personal consumption expenditures price index scheduled for Friday. These reports will not reflect the recent surge in oil prices.
Stucky added, “We may see a bit of an uptick in for CPI inflation over the coming quarter based on what we saw happen this month, but I don’t think that derails, for example, the case for the Fed to actually cut interest rates.” He also stated that the Federal Reserve would likely provide easing or look through a spike in oil prices rather than hiking interest rates.
Earnings Reports
Earnings reports this week include Oracle on Tuesday and Adobe due Thursday.
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