U.S. stock futures fall as Gulf escalation hits tech shares and lifts oil

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US stock futures fall on Gulf tensions

Highlights

S&P 500 E-minis decline 0.31% and Nasdaq 100 E-minis drop 1.01% as Iran-U.S. Gulf escalation disrupts tech stocks and pushes crude oil up over 2%.
Semiconductor sector hits negative sentiment with Micron down 5.2%, SK Hynix down 9.3%, and iShares semiconductor ETF off 2.7% in premarket trade.
Investors brace for big week as JPMorgan Chase, Goldman Sachs, Morgan Stanley, Netflix, GE, and UnitedHealth report Q2 earnings, with S&P 500 earnings expected to rise 23.7% year-over-year.

Market moves and immediate catalysts

As reported by Reuters, futures tied to the S&P 500 and the Nasdaq decline on Monday after Iran and the U.S. exchange attacks in the Gulf and Tehran says it has closed the Strait of Hormuz, a critical route for global oil supplies.

The latest violence raises doubts about an interim U.S.-Iran agreement signed last month that is meant to reopen the strait and end the war after 60 days of negotiations. Crude futures rise more than 2% as investors assess the renewed threat to shipping flows, while tech-heavy Nasdaq futures lead losses in premarket trading.

At 5:14 a.m. ET, Dow E-minis are up 28 points, or 0.05%, while S&P 500 E-minis are down 23.5 points, or 0.31%. Nasdaq 100 E-minis are down 303.75 points, or 1.01%.

Semiconductor names are among the biggest decliners. Micron Technology falls 5.2%, while Western Digital, Seagate and Sandisk drop 6%, 4.8% and 6.6%, respectively. U.S.-listed shares of SK Hynix fall 9.3% after a blockbuster Nasdaq debut on Friday, and the iShares semiconductor ETF loses 2.7%.

Kathleen Brooks, research director at XTB, says lower U.S. futures suggest rising geopolitical tensions and the spike in oil prices are disrupting the momentum trade again, weighing on tech stocks and the chip rally.

Earnings and data test rally resilience

The market move comes as investors prepare for a packed week that could challenge the durability of the U.S. stock advance. The S&P 500 is up more than 10% this year and stands less than 1% below its early-June record close, after posting a second straight weekly gain despite swings in chip shares and renewed focus on energy-price risks.

The Dow Jones index closes up 0.29% at 52,637.01 on Friday, and the futures contract is up 0.56% from that close. Major U.S. banks including JPMorgan Chase, Goldman Sachs and Morgan Stanley are due to start second-quarter earnings this week, while Netflix, General Electric and UnitedHealth are also scheduled to report.

S&P 500 earnings are expected to rise 23.7% in the second quarter from a year earlier, according to LSEG IBES. Investors are also watching key economic releases led by Tuesday's U.S. consumer price index, followed by producer prices and monthly retail sales data on Wednesday and Thursday.

Fed Chair Kevin Warsh is expected to deliver his first monetary policy testimony before Congress on Tuesday, while Fed Governor Christopher Waller is scheduled to speak later on Monday about the economic outlook. According to LSEG data, markets are pricing in at least one 25-basis-point rate hike by year-end.

Our earlier coverage of oil’s jump amid renewed U.S.-Iran strikes explained how the main driver was rising concern over tanker safety and potential disruption through the Strait of Hormuz. We noted that traders were rebuilding a geopolitical risk premium in crude even without confirmed damage to major energy infrastructure, and that the key swing factor was whether shipping flows stay open or slow further.

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