TLDR
- Stock futures declined significantly Tuesday following coordinated strikes by Israel and the United States targeting Iran and Lebanon.
- S&P 500 futures decreased 1.5%, Dow futures retreated 1.4%, and Nasdaq 100 futures plunged close to 2%.
- Crude oil prices jumped more than 6%, with Brent crude reaching $82.64 per barrel as shipping routes through the Strait of Hormuz faced disruption.
- President Trump declined to dismiss the possibility of deploying ground forces, indicating the United States could maintain operations extending beyond four to five weeks.
- Treasury yields climbed on concerns about oil-fueled inflation pressure, while Bitcoin declined 2.2% and gold reversed early losses to post gains.
Stock futures faced significant pressure Tuesday morning following military operations targeting Iran and Lebanon that sent energy markets sharply higher and shook investor confidence.
Dow Jones Industrial Average futures declined 692 points, representing approximately 1.4%. S&P 500 futures retreated 1.5%, while Nasdaq 100 contracts dropped roughly 2%.
The decline followed overnight military strikes conducted by Israeli and American jets against targets in Iran and Lebanon. Iranian forces retaliated with attacks on the US Embassy in Saudi Arabia and multiple locations throughout Gulf states, with strike reports emerging from at least nine countries.
The selling marked a dramatic turn from Monday’s trading session. Equities had mounted a strong recovery from significant intraday losses to finish mostly positive, with the S&P 500 recording its largest intraday turnaround since November.
Tuesday’s premarket decline proved more widespread and persistent.
Oil Spikes as Strait of Hormuz Concerns Mount
Crude prices surged more than 6% as tanker traffic began bypassing the Strait of Hormuz, a vital passageway for international oil shipments. Brent crude advanced to $82.64 per barrel, gaining 6.3%, while West Texas Intermediate increased 6.5% to $75.87.
The energy price surge heightened inflation concerns and pushed Treasury yields upward. The 10-year yield advanced 5 basis points to 4.09%, following a 9-point increase in the previous session.
Gold futures gained 0.4% to $5,331 per ounce after recovering from an early decline, as traders sought safety in traditional haven assets. The dollar strengthened 0.6% against a basket of major currencies.
Bitcoin dropped 2.2% to $67,616, mirroring the broader flight from risk assets.
President Trump intensified market anxiety Monday evening, declaring on Truth Social that the United States possessed “a virtually unlimited supply” of weapons. He avoided ruling out ground troop deployment, stating “whatever it takes,” and indicated the conflict could extend well beyond the initially projected four-to-five-week timeline.
Corporate Earnings Still in Focus
Amid geopolitical turbulence, quarterly reporting continued. Target gained in premarket trading following holiday and full-year sales figures that aligned with analyst expectations. Results from Ross Stores, AutoZone, and Best Buy were scheduled for release Tuesday.
Deutsche Bank analyst Jim Reid said the path for markets would hinge on where oil goes. “Any sustained spike would undoubtedly trigger a more meaningful risk-off move,” he said, “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 stood at 48,201, down 744 points, S&P 500 futures traded at 6,780, and Nasdaq 100 futures reached 24,521.
