US stock futures dropped on Monday, September 28, pushed down by rising oil prices following President Donald Trump’s rejection of an Iranian peace initiative. The jump in crude prices revived worries about inflation alongside climbing Treasury yields, with NASDAQ 100 futures pacing the losses ahead of the opening bell.
NASDAQ Futures Lead Premarket Losses
According to Yahoo Finance, NASDAQ 100 futures slid 0.98% at 7:15 a.m. Eastern time. S&P 500 futures decreased 0.52%, and Dow Jones Industrial Average futures dropped 0.59%. These pre-opening figures reflect index levels prior to the start of regular trading and are subject to change before the stock market opens.
This downward turn came on the heels of a robust week for American equities. Last week, the NASDAQ Composite climbed 2.1% and the S&P 500 added 1.2%, while the Dow gained 0.3% to break a three-week losing streak. Technology stocks spearheaded the rally, with Meta Platforms surging nearly 13% over the course of the week.
The premarket pullback on Monday threatened a portion of those recent gains. Meta shares retreated in early activity following their weekly surge, and Tesla also traded lower after J.P. Morgan trimmed its price target on a weak outlook for third-quarter vehicle deliveries. The broader indexes continued to show heightened vulnerability to fluctuations in both borrowing expenses and crude oil.
Oil Rises After Trump Rejects Iran Proposal
Over the weekend, specifically on Saturday, Trump announced he had turned down an Iranian peace initiative. Reuters reported that Tehran had put forward the plan during the previous week’s United Nations General Assembly via Qatari intermediaries. Trump subsequently mentioned to Axios that he anticipated American negotiators would maintain discussions through the week.
Reports regarding the proposal outline provisions for a temporary reopening of the Strait of Hormuz. Because these conditions are still part of ongoing talks without any formal agreement to clear the waterway, traders are closely monitoring potential access changes, given that the strait serves as a vital shipping lane for petroleum from the Middle East.
During Monday’s session, Brent crude climbed upward by more than 3% to reach approximately USD 108 per barrel, accompanied by gains in US crude. Crude values have experienced significant volatility as market participants gauge the duration of regional supply disruptions. Just last week, Brent dipped momentarily beneath USD 100 a barrel amid optimism that diplomatic discussions might de-escalate tensions.
Treasury Yields Add to Pressure on Stocks
In step with crude prices, US Treasury yields moved higher. The 10-year yield crossed above 5.2%, building on a close from the prior week that marked its highest level since 2007. As bond prices decline, yields increase, driving up financing costs for households, corporations, and public entities alike.
These climbing energy expenses have exacerbated fears that inflation could persist at elevated levels. Concurrently, market participants have stepped up their expectations for additional interest rate hikes by the Federal Reserve. These shifts are crucial for equities because investors continually weigh projected stock returns against alternative yields offered by fixed-income assets.
This shift follows a prior week wherein US stocks advanced despite rising Treasury yields. Monday’s premarket drop indicates that investors are re-evaluating that equilibrium in light of surging oil values, with the true trajectory of the session to be determined once regular US trading begins.
Inflation and Jobs Data Ahead this Week
Market participants are bracing for a series of key economic releases throughout the week. The personal consumption expenditures price index for August—a primary inflation gauge monitored closely by the central bank—is slated for release on Wednesday. This will be followed by manufacturing numbers on Thursday and the monthly jobs report for September on Friday.
Additionally, Federal Reserve policymakers Michelle Bowman, Lisa Cook, and Thomas Barkin are scheduled to deliver remarks on Monday. Investors will scrutinize their commentary for insights into how officials assess monetary policy, inflation, and the labor sector following the latest escalation in crude prices.
International exchanges displayed mixed sentiment ahead of the US opening bell. Japan’s Nikkei 225 index finished down 0.73%, and South Korea’s Kospi dropped 2.7%. Conversely, European indexes advanced in early trading, with the CAC 40 in France and the FTSE 100 in Britain both showing gains. Even so, domestic futures signaled a weak start for Wall Street.
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