Wall St futures drop as tensions rise in the Middle East

US Stock Futures Drop Amid Escalating Middle East Tensions

On Monday, futures for major US stock indexes declined by more than 1% as concerns grew that ongoing unrest in the Middle East could persist for several weeks. Investors are increasingly worried that the conflict may disrupt international trade and intensify inflationary trends.

Airline stocks were among the hardest hit in early trading, with several carriers suspending flights and crude oil prices surging by 8%. The uncertain global economic outlook also put pressure on financial sector shares.

• Delta and United Airlines each saw their shares fall by over 5% before the market opened.
• Major banks, including Bank of America and Citigroup, experienced declines of more than 2% each.

Meanwhile, investors shifted their focus to traditional safe-haven assets such as the US dollar. Rising prices for precious metals benefited mining companies, with Gold Fields gaining 3.6% and Barrick Mining up 2.8%.

Defense industry stocks also attracted buyers: Lockheed Martin and RTX both advanced around 6%, Kratos soared 9%, and AeroVironment jumped 10.3%.

Following coordinated US and Israeli strikes that resulted in the death of Iran’s Supreme Leader Ayatollah Ali Khamenei, Israel responded with further attacks after Iranian and Hezbollah airstrikes from Lebanon. These developments have heightened fears that the conflict could spread further throughout the region.

According to reports, US President Donald Trump indicated that the conflict might continue for another month, emphasizing that military operations would persist until US objectives are met.

Analysts at SocGen noted, “While it’s easy to misinterpret President Trump’s recent policy moves and statements, the key takeaway from his latest address is that US involvement is expected to last for ‘weeks’ rather than days, suggesting a more sustained impact on the markets.”

As of 4:17 a.m. ET, Dow E-minis were down 572 points (1.17%), S&P 500 E-minis fell 75.75 points (1.1%), and Nasdaq 100 E-minis dropped 364.5 points (1.46%).

The CBOE VIX index, often referred to as Wall Street’s “fear gauge,” jumped 3.84 points to reach 23.7, its highest level in three months.

This geopolitical shock comes at a time when markets are already unsettled by concerns over artificial intelligence disruptions, instability in private credit markets, and uncertain trade prospects.

While the S&P 500 and Nasdaq recorded their sharpest monthly declines since March 2025, the Dow managed to extend its winning streak to ten consecutive months, marking its longest run since January 2018.

Additional Updates

A sustained increase in oil prices could further fuel inflation, especially as recent data has already reinforced expectations that the Federal Reserve is unlikely to lower interest rates soon.

Investors are also preparing for several important US economic reports. Manufacturing PMI data for the previous month is expected later today, while January retail sales, ADP employment numbers, and the widely watched non-farm payrolls report are all scheduled for release later in the week.

Reporting by Pranav Kashyap, Johann M Cherian, and Shashwat Chauhan in Bengaluru; Edited by Sherry Jacob-Phillips and Maju Samuel