Traders work on the floor of the New York Stock Exchange (NYSE) on May 10, 2023.
Brendan McDermid | Portal
Stock futures were lower on Sunday as the attack on Israel by Palestinian militants increases geopolitical risk to an already fragile market grappling with inflation and rising interest rates.
Futures tied to the Dow Jones Industrial Average fell 207 points, or 0.6%. S&P 500 futures fell 0.7%, while Nasdaq 100 futures fell 0.6%.
The Israeli-Palestinian conflict escalated into a full-scale war on Saturday after the militant group Hamas staged an invasion that appeared to catch Israel by surprise. Israeli Prime Minister Benjamin Netanyahu assured that Hamas “will pay a price it has never known before.”
WTI crude oil futures rose 2% in early trading on Sunday.
Rising geopolitical tensions could have an impact on the energy market, with some experts predicting a “knee-jerk rise” in oil prices. The rising tension could also serve to further fuel market volatility that has traders worried amid ongoing inflation and higher interest rates.
Oil prices fell well below $90 a barrel last week, with Brent crude slipping about 11% and US West Texas Intermediate down 8%. While neither Israel nor Palestine are major players in the global energy picture, both nations are in a key oil region that could have broader implications. OPEC+, the oil cartel that includes non-OPEC member Russia, will remain cautious on any moves to further expand oil production and change cuts plans, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman told CNBC on Sunday.
With the bond market closed Monday for Columbus Day, Wall Street will have to wait until Tuesday for an update on interest rates.
All three major indexes ended last week higher, despite a stronger-than-expected jobs report that initially pushed up Treasury yields and sent stocks lower. A better-than-expected jobs report Friday showed that hiring remained robust and the economy added 336,000 jobs last month. Meanwhile, wage growth was broadly muted, giving investors hope that inflation would cool.
Bond yields eased slightly as stocks rose on Friday, but the 10-year Treasury yield hit a 16-year high earlier in the week.