Stock futures slipped in overnight trading Sunday as stalled Iran peace talks and a fresh escalation in the Strait of Hormuz pushed oil prices higher, keeping geopolitical tensions front and center heading into a pivotal week. Futures tied to the Dow Jones Industrial Average fell 0.2%, or 130 points. S&P 500 futures declined 0.3%, whereas Nasdaq 100 futures slipped 0.3%.
The moves came after President Donald Trump scrapped plans to send U.S. Special envoy Steve Witkoff and Jared Kushner to Pakistan for ceasefire talks related to Iran, noting the negotiations could happen by phone. “Too much time wasted on traveling, too much work!” the president wrote in a post on Truth Social. “Nobody knows who is in charge, including them. Also, we have all the cards; they have none! If they want to talk, all they have to do is call!!!” Iran’s Foreign Ministry spokesman Esmaeil Baqaei said no meeting between Tehran and Washington is currently planned.
Tensions escalated near the Strait of Hormuz after Iran’s Islamic Revolutionary Guard Corps boarded two container ships near the vital shipping lane, a key artery for global crude flows. West Texas Intermediate futures rose about 2% to above $96 a barrel, while international benchmark Brent oil futures rose about 2% to top $107 per barrel. Adam Crisafulli of Vital Knowledge called the impact “a modest negative” but said the conflict remains on a path of de-escalation.
Markets brace for a week defined by tech earnings and Federal Reserve policy
On the corporate front, five of the “Magnificent Seven” companies are set to report results in the final week of April, raising the stakes for a market already priced for strong growth. Attention will also turn to the Federal Reserve’s policy decision on Wednesday, which could mark Jerome Powell’s final meeting as chair before Kevin Warsh is expected to capture over in May. The Department of Justice decided to drop its criminal probe into Powell on Friday, causing Sen. Thom Tillis to end his block of Warsh’s confirmation.
For more on this story, see Oil Prices Fall as U.S.-Iran Talks Stall and Hormuz Shipping Restrictions Persist.
The S&P 500 and Nasdaq Composite ended last week at fresh all-time highs, extending a powerful rally despite tensions in the Middle East and doubts about record artificial intelligence spending. April is shaping up to be a strong rebound month for equities. The S&P 500 is up more than 9%, while the Nasdaq has surged over 15%. The blue-chip Dow has gained more than 6% month to date.
Oil prices climb as Hormuz disruptions threaten global supply
Global tensions intensified after stalled efforts to revive Iran-related talks failed to open the Strait of Hormuz, as global oil supply restrictions continue to push up consumer prices across a wide-range of industries. Crude prices moved higher, with Brent and West Texas Intermediate futures climbing around 2% each to trade above $100 and $96 a barrel, respectively. The Strait of Hormuz remains a critical chokepoint, with about 20% of global oil supply passing through the waterway.
Last time a similar escalation occurred in early 2024, Brent crude spiked to $92 a barrel before easing as diplomatic channels reopened. This week’s rise comes as markets weigh the risk of prolonged disruption against the backdrop of already-elevated inflation pressures.
Investors watch for signs of stability in fragile markets
Markets now turn to a pivotal stretch on the calendar. Earnings from several mega-cap tech names of the colloquially named “Magnificent Seven” are due in the coming days, a strong test of stock resilience in response to the Iran war. Investors are also focused on the upcoming decision from the Federal Reserve. The meeting is expected to be the penultimate one chaired by Jerome Powell before leadership transitions to Kevin Warsh.
This follows our earlier report, U.S. Stock Futures Drop as Iranian Ship Seizure Sparks Gulf Tensions and Oil Surge.
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Why did stock futures fall despite strong monthly gains?
Futures slipped due to renewed geopolitical tensions from stalled Iran peace talks and escalations in the Strait of Hormuz, which drove oil prices higher and dampened investor appetite, even as the S&P 500 and Nasdaq posted strong April gains.
How significant is the Strait of Hormuz to global oil markets?
The Strait of Hormuz is a vital shipping lane through which about 20% of the world’s oil supply passes, making any disruption there a direct threat to global crude flows and a key driver of price volatility.