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US stock index futures dropped on Monday after President Donald Trump rejected an Iranian proposal to end the conflict, sending crude prices surging and reigniting inflation concerns. The rejection pushed oil higher and lifted Treasury yields as investors braced for key economic data this week.
US stock index futures dropped on Monday after President Donald Trump rejected an Iranian proposal to end the conflict. The rejection sent crude prices surging, rekindled inflation concerns and drove Treasury yields higher.
US Futures Fall Amid Iran Uncertainty
Futures for the S&P 500 and the Dow Jones Industrial Average both declined 0.5 per cent. Nasdaq futures dropped 1 per cent. Iran announced a peace proposal at last week's United Nations General Assembly in New York, saying it had been relayed to the United States through Qatari mediators.
Iran had offered to reopen the Strait of Hormuz and resume talks on its nuclear program if the US lifts its naval blockade of Iranian ports, waives sanctions on Iranian oil sales and observes a ceasefire that would include Lebanon. On Saturday, Trump rejected the proposal, saying Iran wanted to make a deal because it was losing so badly. He told Axios on Sunday that he expected US negotiators to continue talks this week.
Crude Prices Surge on Supply Concerns
Crude prices jumped 3 per cent to around $108 a barrel. Brent crude, the international standard, rose 3.6 per cent to $100.98 a barrel for delivery in December. But there is a red flag when compared with the contract for November delivery, or oil that buyers want right now. The price for a barrel of oil delivered more quickly is nearly $108, suggesting high anxiety over supply after Trump's rejection of a deal to get crude moving again.
Benchmark US crude jumped 4.2 per cent to $96.26 a barrel. The spread between November and December delivery is broad in the US as well. The 60-day rolling correlation between oil prices and Wall Street futures has climbed to its highest level since late May, LSEG data showed. That suggests energy markets and equities are becoming more sensitive to the same macro factors, including the potential economic and inflationary impact of a prolonged conflict.
Gold Miners Decline as Yields Rise
US-listed shares of precious metal miners were among top decliners as elevated yields weighed on prices of the non-yielding assets. Gold Fields slid 16 per cent in premarket trading, while Harmony Gold and Endeavour Silver lost 5 per cent and 6 per cent, respectively. At 05:42 a.m. ET, Dow E-minis were down 187 points, or 0.36 per cent, and S&P 500 E-minis were down 38 points, or 0.49 per cent.
Nasdaq 100 E-minis were down 304 points, or 0.98 per cent. Investors got some relief on the trade front following the conclusion of the Sino-US summit last week where the trade partners agreed to cut tariffs imposed on $60 billion worth of goods imported from each other. The countries also agreed to a two-month extension of their trade truce through to January 10.
Meanwhile, scrutiny was high on the accessibility of several AI agents following several recent incidents of hacking, including one where OpenAI's models accessed publicly available information from US government websites, according to a report. In early trading, Nvidia moved higher on a big share buyback authorization, and also the unveiling of a new security platform. Tesla dipped 1 per cent after brokerage J.P. Morgan lowered its price target on the stock citing weak deliveries in the third quarter.
AI Stocks and Fed Outlook Watched
Meta eased 2.2 per cent after last week's 13 per cent surge. As the week progresses, the spotlight will be on a slew of crucial economic indicators at a time when traders are pricing in a 70 per cent chance that the Federal Reserve will hike interest rates by at least 25 basis points back-to-back in October, the CME Group's FedWatch Tool showed.
There is also a wave of economic data being released in the US this week, including the latest report on job openings by the Labor Department on Tuesday. The Commerce Department will issue its third and final estimate of how the US economy performed in the second quarter of 2026 on Wednesday.
The Personal Consumption Expenditures Index for August and the Non-Farm Payrolls report for September, both due this week, could help investors gauge the path for monetary policy by the Fed this year. Policymakers Michelle Bowman, Lisa Cook and Thomas Barkin are due to speak later on Monday and could reiterate the hawkish shift in policy at the central bank since the previous meeting.
In Europe, France's CAC 40 edged up 0.2 per cent to 8,095.96, while the German DAX slipped 0.1 per cent to 25,391.66. Britain's FTSE 100 rose 0.2 per cent to 10,719.39. Asian markets were mostly lower. The US dollar dipped to 157.05 Japanese yen from 157.19 yen. The euro cost $1.1372, down from $1.1393.
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CP24:Surging oil prices drag U.S. futures lower as Trump rejects Iranian proposal to open Strait of HormuzThis story was compiled and edited by the HeadTopics newsroom and HT AI from the reports above.
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