US President Donald Trump’s swift rejection of Iran’s response to a US peace proposal stoked worries that the 10-week-old conflict could drag on and keep shipping through the Strait of Hormuz paralyzed. That sent crude prices LCOc1, CLc1 up almost 3%.
“With majority of earnings reports in the rearview mirror, we have to shift our focus back to the ability to get oil flowing through the strait and energy prices down and that’s just not happening today,” said Art Hogan, chief market strategist at B Riley Wealth.
US stocks touched fresh peaks last week, with the S&P 500 and the Nasdaq both closing at record highs on Friday, buoyed by upbeat corporate earnings, a solid monthly payrolls report and expectations of a swift resolution to the Middle East conflict.
At 08:37 am ET, Dow E-minis YMcv1 were down 20 points, or 0.04%, S&P 500 E-minis EScv1 were down 5.75 points, or 0.08%, and Nasdaq 100 E-minis NQcv1 were down 27.75 points, or 0.09%.
Investors will now look to Tuesday’s consumer price index data, which is expected to show inflation ticked higher in April as the Middle East conflict puts upward pressure on energy prices.
While the US is a net oil exporter, concerns about the war’s impact on consumer demand and companies still linger. Producer prices and monthly retail sales figures are also due later in the week.
Also on the radar is a meeting between Trump and Chinese President Xi Jinping later this week, when the two leaders are set to discuss Iran, Taiwan, artificial intelligence and nuclear weapons, while also weighing an extension of a critical minerals deal.
The first-quarter reporting season will soon start winding down after a much stronger-than-expected performance from companies, particularly in the technology sector, helped push stocks to new highs.
Major names due to report this week include tech networking giant Cisco and semiconductor equipment maker Applied Materials, while heavyweights Nvidia and Walmart are due to report later in the month.
On Monday, Mosaic fell 6.4% in premarket trading after the fertiliser maker withdrew its forecast for annual phosphate production.
Media major Fox Corp jumped 5.6% after beating Wall Street estimates for third-quarter revenue.
Intel climbed 4.3% after surging 14% on Friday on a report of a preliminary chip-making agreement with Apple.
Among other movers, some airline stocks slipped as rising oil prices threatened to squeeze margins. Southwest Airlines, Delta Air Lines , Alaska Air and United Airlines fell between 1% and 1.5%.