S&P futures declined early Monday as hostilities reignited between the U.S. and Iran for the first time in a month. Futures for the Dow Jones Industrial Average were down 64 points, reflecting a decrease of 0.12%, at 5:10 am. S&P 500 futures declined by 0.1%, whereas Nasdaq 100 futures experienced a slight decrease. On Sunday, U.S. Central Command confirmed to MS NOW that the U.S. struck two rocket launchers on Iran’s Larak Island. Sunday’s attack marked the initial publicly recognised U.S. strike on Iranian positions since late July, with Iranian state media indicating that Tehran had retaliated by targeting U.S. bases in Jordan. Oil prices surged in early trading following the resumption of hostilities. U.S. West Texas Intermediate oil experienced an increase of 3.4%, reaching $86.25 per barrel, whereas global benchmark Brent crude oil futures rose by 3.6%, now priced at $91.24.
Heightened tensions in the Middle East have contributed to choppy trading in August; however, Wall Street is currently on track for a month of broad gains, with the tech sector leading the way. The Dow is up 2.1% month-to-date, positioning the index for its fifth consecutive monthly advance. The S&P 500 and Nasdaq Composite were on track for their initial one-month gains since May, rising by 3% and 4%, respectively. Both the S&P 500 and Dow attained unprecedented peaks earlier in August. Technology spearheaded the momentum this month, as stocks associated with artificial intelligence demonstrated superior performance. The S&P 500 tech sector has experienced an increase of nearly 6% for the month. Nvidia has increased by over 8%, whereas Microsoft and Micron Technology have risen by 11% and 13%, respectively.
August has indeed proven to be a tumultuous month, with inflation concerns driving Treasury yields to levels not seen in several years. The Treasury Department attempted to mitigate the downturn by announcing an increase in debt repurchases; however, yields at the long end of the curve continue to stay high. Federal Reserve Chairman Kevin Warsh expressed concerns regarding inflation on Friday, stating that, “while this summer’s [inflation] readings were better than expected, they do not tell me that underlying trends have meaningfully improved.” And “Although we doubt this was intended to foreshadow September’s tightening given his distaste for signaling, his hawkish discussion makes a 25bp September hike more likely than not. Given his inflation metrics, our baseline calls for another in December,” wrote economist Jonathan Millar in a note.
Investors are poised to gain further understanding of the economic landscape this week, as the August jobs report is scheduled for release on Friday morning. Data pertaining to the monthly performance of the manufacturing and services sectors is forthcoming. In Asia, Japan’s benchmark Nikkei 225 experienced a decline of 0.14%, whereas South Korea’s Kospi managed to reverse its losses, closing 0.46% higher. Mainland China’s CSI 300 increased by 0.35%, while Hong Kong’s Hang Seng ended the day unchanged. Australia’s S&P/ASX 200 experienced a decline of 0.18%, settling at 9,076. European stocks exhibited a mixed performance on Monday, as the pan-European Stoxx 600 hovered just below the flatline, while energy stocks recorded gains in response to a surge in oil prices. The markets in the United Kingdom are currently closed due to a public holiday.
