US stock futures came under pressure early Monday, with Nasdaq 100 futures falling more than 1% as investors weighed surging oil prices, rising Treasury yields and expectations of further interest-rate hikes. As of 3:55 p.m. IST, Nasdaq 100 futures were down 1.01%, or 312 points, at 30,578.25. Dow Jones futures fell 0.43%, or 224 points, to 51,939, while S&P 500 futures declined 0.54%, or 42.25 points, to 7,761.50.
The weakness comes despite a strong week for Wall Street. The Dow Jones Industrial Average gained 0.3% last week, snapping a three-week losing streak. The S&P 500 and Nasdaq Composite advanced 1.2% and 2.1%, respectively, marking their best weekly performances since early August.
Here are three key factors weighing on US equities on Monday:
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Oil Prices Surge On Iran Ceasefire Uncertainty
Rising crude prices were among the biggest pressures on equity futures. Brent crude jumped 3.73% to $101.01 a barrel, while West Texas Intermediate futures gained around 4.22% to $96.31. The gains came after US President Donald Trump rejected conditions for a ceasefire presented by Iran.
A sustained rise in crude prices could complicate the inflation outlook, particularly if higher energy costs feed through to consumer prices and business costs. The increase in oil prices has also triggered concerns that central banks could be forced to keep monetary policy tighter for longer.
Treasury Yields Hit Multi-Year Highs
US government bond yields climbed sharply, adding another layer of pressure on equities. The yield on the 10-year US Treasury rose to its highest level since 2007, while the 30-year yield reached its highest level since 2004.
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The global bond sell-off was not limited to the US. European government bond yields also moved higher, with the 10-year German Bund yield reaching its highest level since 2009. Higher yields can weigh particularly heavily on technology and other growth stocks because they increase the discount rate applied to future earnings.
Investors are also reassessing the interest-rate outlook as higher energy prices threaten to push inflation higher.
Markets Price In More Fed Rate Hikes
Expectations of additional interest-rate increases are another source of pressure for equities. Swap markets are now fully pricing in three more rate hikes by the end of next year, with the possibility of a fourth, as rising energy prices add to inflation concerns.
In addition to energy costs, strong US business activity and concerns surrounding government debt levels have contributed to the rise in bond yields. The combination of higher inflation expectations and higher borrowing costs could make the environment more challenging for risk assets.
Tech Stocks Under Pressure
The weakness in futures comes after technology stocks led the US market's gains last week.
Meta Platforms rallied nearly 13% last week as investors responded positively to its Muse artificial intelligence agent. Microsoft gained more than 4%, while Apple and Nvidia advanced more than 1% each.
However, Meta fell 3.4% in premarket trading on Monday after its sharp rally last week. The pressure on technology stocks was also visible across Asian markets, where chipmakers were among the biggest decliners.
Gold, Silver Also Slide
The shift in rate expectations also weighed heavily on precious metals.
Gold futures fell 3.1% to $4,188.10, while spot gold declined 3.05% to $4,155.55 shortly after 4 a.m. ET. Silver came under even greater pressure. Silver futures dropped 5.22% to $61.42 per troy ounce, while spot silver fell 4.87% to $61.15.
The moves in precious metals reflect the broader reassessment of interest-rate expectations, as investors weigh whether persistent inflationary pressure from energy prices could prompt central banks to maintain or increase borrowing costs.
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