US futures extend losses after Friday rout as Iran situation deteriorates; Oil climbs

US stock futures extended losses on Sunday evening after a sharp sell-off on Friday, with Dow Jones futures dropping as much as 250 points and currently down around 200 points. The S&P 500 and Nasdaq futures fell 20 and 60 points respectively, following Friday’s broader market decline, where the Nasdaq dropped over 4% and the Dow Jones fell by more than 700 points. The escalation between Iran and Israel drove market volatility. Bloomberg reported that Israel identified incoming missiles from Iran, with Israeli officials signaling retaliation, while the US Central Command confirmed shooting down two Iranian drones threatening the Strait of Hormuz. Iran’s state media warned of continued attacks if Israel responds or persists in targeting Lebanon. Iraq closed its airspace for 72 hours due to the escalation. Market sentiment was further weighed down by a strong US jobs report that exceeded expectations, effectively ending speculation about Federal Reserve rate cuts in 2024. The Fed is set to meet next week for its first policy decision under new Chair Kevin Warsh, with bond traders already pricing in at least one rate hike by December. The two-year bond yield hit its highest level since February 2025, reflecting heightened expectations of tighter monetary policy. Crude oil prices rose over 3% as tensions escalated, with Brent crude surpassing $95 a barrel and US crude futures climbing similarly. The US Dollar Index crossed 100, while Bitcoin prices fell below $60,000. Gold and silver prices remained relatively unchanged. Former US President Donald Trump told Axios he would call Israeli Prime Minister Benjamin Netanyahu to advise against retaliating, while telling Fox News he would urge Iran to halt attacks and return to negotiations. The next major market trigger will be US inflation data, with CPI figures due Wednesday and wholesale inflation (PPI) reports on Thursday.