US stock futures declined on Sunday evening as investors grappled with uncertainty over Iran and anticipated a key inflation report later this week. Crude oil prices surged during the same period.
Futures tied to the S&P 500 (ES=F) dropped 0.4%, Nasdaq 100 (NQ=F) contracts fell 0.6%, and Dow futures (YM=F) slipped 0.3%.
Energy markets rose as geopolitical instability pushed oil prices higher. West Texas Intermediate (CL=F) crude surged nearly 3% to around $78 per barrel, and Brent (BZ=F) crude surpassed $81 as traders evaluated risks of Middle East disruptions.
Market sentiment was shaken after President Donald Trump cautioned Iran about potential further military action if Tehran failed to control allied groups in Lebanon. This came as Vice President JD Vance initiated renewed diplomatic discussions with Iranian officials in Switzerland.
Focus shifts to Thursday’s release of the Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation measure. Economists anticipate the core PCE, excluding food and energy, to rise modestly from April’s figures.
The report follows the Fed’s recent hawkish shift, leading traders to reevaluate interest rate trajectories. Markets have moved up expectations for the next rate increase, making this week’s inflation data crucial for investors seeking signs of persistent price pressures that might necessitate further tightening.
