TLDR
- US stock futures plunged Tuesday following new airstrikes by Israeli and US aircraft on Iran and Lebanon.
- S&P 500 futures declined 1.5%, Dow futures were down 1.4%, and Nasdaq 100 futures sank almost 2%.
- Oil prices skyrocketed more than 6%, with Brent crude reaching $82.64 per barrel as tankers steered clear of the Strait of Hormuz.
- President Trump did not exclude the possibility of sending US ground forces, stating the US could maintain the conflict for “far longer” than four or five weeks.
- Treasury yields increased on investor concerns about oil-fueled inflation; Bitcoin fell 2.2% and gold recovered from an early decline to trade higher.
US stock futures fell sharply early Tuesday as fresh military strikes against Iran and Lebanon unsettled financial markets and drove crude prices upward.
Dow Jones Industrial Average futures lost 692 points, approximately 1.4%. S&P 500 futures declined 1.5%, and Nasdaq 100-linked contracts fell about 2%.
These market shifts occurred after overnight airstrikes by Israeli and US warplanes on locations in Iran and Lebanon. Iran retaliated by attacking the US Embassy in Saudi Arabia and other sites throughout Gulf states, with strikes reported in at least nine nations.
BREAKING: Global stock markets post largest declines in months as Brent oil prices surge above $85/barrel and Trump says the US can fight “forever.”
1. South Korea: -8%
2. Japan: -6%
3. South Africa: -6%
4. Germany: -5%
5. Spain: -5%
6. Italy: -4%
7. United Kingdom: -4%
8.…— The Kobeissi Letter (@KobeissiLetter)
This represented a stark turnaround from Monday’s trading. Stocks had bounced back from significant midday declines to finish mostly in positive territory, with the S&P 500 recording its largest intraday rebound since November.
The premarket sell-off on Tuesday was more widespread and persistent.
Oil Spikes as Strait of Hormuz Concerns Mount
Oil prices surged over 6% after tankers started bypassing the Strait of Hormuz, a vital passageway for worldwide oil shipments. Brent crude advanced to $82.64 a barrel, a gain of 6.3%, while West Texas Intermediate increased 6.5% to $75.87.
The jump in oil prices amplified inflation worries and pushed Treasury yields up. The yield on the 10-year note rose 5 basis points to 4.09%, following a 9-point increase the previous session.
Gold futures advanced 0.4% to $5,331 per ounce after an initial drop, as investors sought safe-haven assets. The US dollar strengthened 0.6% versus a basket of major currencies.
Bitcoin dropped 2.2% to $67,616, mirroring the overall shift away from risk.
President Trump intensified concerns Monday night by posting on Truth Social that the US possessed “a virtually unlimited supply” of armaments. He would not dismiss the use of ground troops, vowing “whatever it takes,” and indicated the war might last “far longer” than the original four-to-five-week projection.
Corporate Earnings Still in Focus
Amid the geopolitical turmoil, the earnings season proceeded. Target’s stock moved higher premarket after reporting holiday and annual sales that aligned with Wall Street expectations. Financial reports from Ross Stores, , and Best Buy were also scheduled for Tuesday.
Deutsche Bank analyst Jim Reid noted that the direction of markets would depend on oil price movements. “Any sustained spike would undoubtedly trigger a more meaningful risk-off move,” he stated, “but without that, markets are likely to revert fairly quickly to focusing on macro data and AI-related themes.”
As of Tuesday morning, Dow futures were lower by 744 points at 48,201, S&P 500 futures were at 6,780, and Nasdaq 100 futures traded at 24,521.
