U.S. Stock Futures Slip Amidst Growing Conflict in the Middle East

U.S. stock index futures experienced a slight decline on Monday as escalating tensions between Israel and the Palestinian Islamist group Hamas rattled global markets. The conflict has prompted investors to seek safe-haven assets, leading to a surge in crude oil prices. Israel’s ongoing battle to regain control of towns from Hamas, following the group’s deadly rampage and seizure of hostages, has caused growing uncertainty in the region.

In a show of support, the United States announced plans to send multiple military ships and aircraft closer to Israel. As a result, traditional safe-haven assets like gold and the U.S. dollar gained, while crude oil prices rose by nearly 3%.

Mohit Kumar, Chief Economist Europe at Jefferies, noted that the scale of the attack and loss of lives suggests that the response may last for several months, potentially until the end of the year.

In premarket trading, U.S. energy companies such as Chevron, Exxon Mobil, Marathon Oil, and Occidental Petroleum saw their stocks rise between 2.1% and 3.7% due to the increase in oil prices. Defense companies, including Northrop Grumman, RTX, General Dynamics, and Lockheed Martin, also experienced gains of 4.1% to 5%.

However, megacap stocks like Apple, Microsoft, Nvidia, Meta Platforms, Alphabet, and Amazon.com dipped slightly between 0.3% and 2.1%.

Investors will closely monitor economic data this week, with the September producer price index and consumer price inflation readings scheduled for Wednesday and Thursday, respectively. Additionally, speeches by Federal Reserve Vice Chair Philip Jefferson and Vice Chair for Supervision Michael Barr will be of interest to market participants.

Over the weekend, Federal Reserve Governor Michelle Bowman reiterated concerns about high inflation levels, suggesting that further tightening of monetary policy may be necessary.

The upcoming quarterly earnings reports from major banks, including JPMorgan Chase, Wells Fargo, Citigroup, and asset manager BlackRock, will also be closely watched.

In other news, Tesla’s China-made electric vehicle sales volume for September decreased by 10.9% compared to the previous year, causing a 1.6% dip in the company’s stock. Furthermore, cancer drugmaker Mirati Therapeutics saw a 2% decline in its shares after Bristol-Myers Squibb announced its acquisition of the company in a deal worth up to $5.8 billion.

As the conflict in the Middle East continues to unfold, investors remain cautious about the potential impact on global markets and the broader geopolitical landscape.