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U.S. stock futures rose to start the week even as tensions between Israel and Iran stirred concerns in global energy markets, causing oil prices to climb sharply.
Dow futures moved up by 0.36%, while the S&P 500 gained 0.42% and the tech-heavy Nasdaq climbed 0.49%. This uptick in equities came despite escalating conflict in the Middle East, which has kept oil markets on edge.
Over the weekend, Israeli strikes reportedly disrupted key energy infrastructure in Iran, including a temporary shutdown of a major natural gas facility and hits on fuel storage sites. The military actions follow a dramatic week that saw Israel launch attacks on Iranian targets and Iran responding with its own strikes, triggering the largest spike in oil prices seen in over three years.
Oil markets continued to climb as investors reacted to the possibility of further instability in the region. While some fears were sparked by Iran’s suggestion it could consider closing the Strait of Hormuz—a vital global oil supply route—experts downplayed the likelihood.
“The closure of Hormuz is a low-risk event,” said Natasha Kaneva, Head of Global Commodities Research at JP Morgan. “Iran would be hurting its own economy and straining relations with its biggest customers.” She added that many Middle Eastern economies are deeply invested in long-term economic reforms that depend on regional stability.
The geopolitical backdrop also comes with domestic economic concerns. Rising oil prices are expected to put upward pressure on inflation, which has been a persistent challenge for both consumers and the Federal Reserve. Since oil costs influence everything from fuel prices to transportation and manufacturing, the ripple effects could be felt widely across the U.S. economy.
That’s part of why economists predict the Fed will stay the course on interest rates when it concludes its latest policy meeting later this week. The CME FedWatch tool suggests markets overwhelmingly expect no change in the current rate, as policymakers remain cautious amid inflationary pressures.
In a separate development, former President Donald Trump issued a stern warning to Iran, saying any attacks on U.S. interests would be met with “the full strength and might” of the American military.
Despite the rising tension overseas and inflationary worries at home, investors appeared to focus on corporate fundamentals and a resilient labor market, helping push stock futures higher as the trading day approached.
About the Market Outlook
While volatility remains a key theme in 2025, investor sentiment continues to find footing in strong earnings and innovation—especially in tech and AI sectors. Still, with geopolitical uncertainty and inflation risks hovering, market watchers advise keeping a close eye on energy prices and Fed signals in the coming weeks.
