Dow Jones Industrial Average futures fell 137 points on Tuesday as renewed U.S.-Iran tensions drove oil prices higher and unsettled the broader market. Traders now brace for the June CPI report, bank earnings, and Fed Chair Kevin Warsh’s testimony before Congress.
Dow futures pointed lower before the open as a flare-up between the U.S. and Iran soured sentiment across Wall Street. Dow Jones Industrial Average futures fell 137 points, or 0.3%. S&P 500 futures slid 0.1%, while tech bucked the trend, with Nasdaq 100 futures climbing 0.4% as investors moved back into chip makers after Monday’s selloff.
Oil rally drives the risk-off mood
The pressure on the Dow traces back to crude. Oil prices rose again early Tuesday after a third straight night of U.S. strikes on Iran, reviving inflation concerns. Brent futures gained 3.3% to $86.05 a barrel. West Texas Intermediate added 3.1% to trade at $80.58 a barrel. The spike followed President Donald Trump’s statement that the U.S. would reinstate its naval blockade of the Strait of Hormuz.
Higher energy costs fed straight through to bonds. The 10-year Treasury yield rose 1.4 basis points to 4.623%, after touching an eight-week high of 4.636% earlier in the session. The dollar moved the other way, with the DXY index down 0.2% to 101.075 as investors waited on data.
Fear gauge ticks up before a busy day
Nervousness showed in the volatility reading. The Cboe Volatility Index rose 1% to 17.32, still below the 20 level that tends to signal heightened market stress. UBS Global Wealth Management Chief Investment Officer Mark Haefele said both Washington and Tehran remain motivated to avoid a return to all-out war.
Several events could pull attention away from Iran. The Bureau of Labor Statistics is set to release the June consumer price index report, which will show what impact the conflict had on inflation last month. JPMorgan and Goldman Sachs are among the banks reporting as second-quarter earnings ramp up, while Federal Reserve Chairman Kevin Warsh is set to testify before Congress about monetary policy and the economy.
Source: Barron’s
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