U.S. stock futures pointed to a third consecutive day of losses on Tuesday, as elevated oil prices and rising bond yields weighed on sentiment, extending a pullback from record highs hit last week.
A sell-off in chip stocks and worries about inflation tied to the war in Iran are adding to pressure on equities
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U.S. stock futures pointed to a third consecutive day of losses on Tuesday, as elevated oil prices and rising bond yields weighed on sentiment, extending a pullback from record highs hit last week.
The S&P 500 futures contract was off 0.4% in early trading, with Nasdaq $NDAQ 100 futures down 0.6% and the Dow futures contract pointing to an opening loss of roughly 77 points, equivalent to 0.2%.
The S&P 500 and Nasdaq Composite had hit fresh record highs as recently as Thursday before turning lower. Brent crude, while slipping about 1% on Tuesday to about $110 a barrel, remains more than 80% higher year-to-date. The Strait of Hormuz remains largely blocked, keeping supply tight.
Late Monday, Trump announced he was standing down from a planned military strike on Iran, citing requests from three Middle Eastern regional leaders. The announcement helped oil prices ease, but strategists cautioned it represented a limited shift. "Oil is still up roughly 80% year-to-date, and the Strait of Hormuz remains largely blocked," Munnelly added in the same note, as cited by MarketWatch.
Rising bond yields are compounding the pressure on stocks. The 10-year Treasury yield climbed to about 4.62%, close to its highest level since early 2025, while the 30-year yield hovered around 5.15%, near its highest since 2023. That bond market shift follows a run of data releases pointing to a reacceleration in inflation, driven largely by energy costs tied to the conflict in Iran, and traders have increasingly priced in the possibility that the Fed's next interest-rate move will be upward rather than downward, according to CNBC.
Semiconductor stocks have added to the market's woes. Heading into Tuesday's open, Micron $MU had shed about 2%, putting the chipmaker on course for its fourth consecutive daily decline. Broader chip-sector weakness is evident in the Philadelphia Semiconductor Index, which has shed 6% across the past two sessions amid profit-taking driven by questions over stretched valuations and whether outsized data center investment can be sustained, according to CNBC. Micron stock is still up more than 138% this year.
Japan is adding another layer of unease for global markets, with its benchmark 10-year bond yield climbing past 2.81% for the first time since 1996 following a government report showing first-quarter annualized economic growth of 2.1%. If major Japanese institutional investors rotate capital back into domestic debt, analysts warn that appetite for U.S. Treasuries may soften, which would add additional upward force to already-elevated American borrowing costs, according to MarketWatch.
At the Schwab Center for Financial Research, macro research and strategy head Kevin Gordon argued that the equity rally's most powerful gains are likely in the past. "From a positioning standpoint and how stretched things have gotten, probably means that you don't see as sharp of the rallies that we were seeing certainly off the throes of the low in March," Gordon told CNBC.
Investors are also watching a busy earnings week, with Home Depot $HD reporting before Tuesday's open and Nvidia $NVDA set to post results on Wednesday, according to The Wall Street Journal.
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