U.S. futures fall as Iran risk weighs on markets

Highlights

U.S. futures declined, with Nasdaq 100 down 0.6%.
WTI crude reached $75 a barrel, while Brent crude fell below $80.
Markets are focused on U.S.-Iran talks and Middle East supply risks.
Thursday’s core PCE report may influence Fed rate expectations.

Futures decline as traders assess the oil market

Futures tied to the S&P 500 slipped 0.4%, while Nasdaq 100 contracts fell 0.6% and Dow futures declined 0.3%. The move pointed to a cautious start for Wall Street after investors spent recent sessions reassessing the durability of the U.S.-Iran peace process and the risk of renewed pressure on crude supplies, Yahoo Finance reports.

West Texas Intermediate crude approached $75 a barrel, while Brent crude fell below $80 after reaching $82. The Strait of Hormuz remains a key focus because of its role in global energy flows and because any new threat to shipping could quickly fuel broader inflation expectations.

The market tone weakened after President Donald Trump warned Iran of possible additional military action unless Tehran moved to restrain allied groups in Lebanon. The comments came as Vice President JD Vance opened a new round of diplomatic talks with Iranian representatives in Switzerland. Other reports pointed to progress in U.S.-Iran discussions, but investors remained cautious because the talks have not yet removed the risk of renewed tensions.

Inflation report moves into focus

The geopolitical backdrop is arriving at a sensitive moment for markets. Investors are preparing for Thursday’s release of the Personal Consumption Expenditures price index, the Federal Reserve’s preferred inflation measure.

Economists expect core PCE, which excludes food and energy, to show a modest acceleration from April. That would matter because Fed officials struck a more hawkish tone last week, pushing traders to rethink the path of interest rates.

The oil market adds another layer of uncertainty. Rising crude prices could lift headline inflation and make it harder for policymakers to argue that price pressures are easing. For equity investors, this means the key question this week is not only whether diplomacy can hold, but also whether inflation data will confirm or challenge the Fed’s tougher stance.

Policy and oil risks converge

The pressure on futures shows how closely markets are tying together oil, geopolitics and monetary policy. A stronger inflation reading could reinforce expectations for tighter Fed policy, while any renewed Middle East disruption could raise energy costs at the same time.

That combination would be difficult for stocks, especially growth and technology shares, which are more sensitive to interest-rate expectations. With Nasdaq futures leading Monday’s decline, investors appear reluctant to add risk before they see whether the Iran talks can reduce pressure on oil and whether PCE confirms that inflation remains sticky.

Earlier, we reported that Iran tightens rules for Hormuz ship transit.

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