Oil Price Surge and Middle East Tensions Weigh on Markets

The S&P 500 and Dow Jones indexes are expected to open lower on Tuesday due to rising tensions in the Middle East, which have pushed oil prices up.

Oil prices rose to their highest since late July, with Brent crude futures increasing by 1.64% to $98.59 a barrel. This has led to a higher risk premium in energy markets and is making it more difficult for investors to take on the added risk of buying stocks.

Elevated yields on risk-free U.S. Treasuries have also made it less attractive for investors to buy stocks, with the yield on the 10-year Treasury note rising by 0.42 basis points to 4.7882%.

Some investors believe that inflation readings will be more important than rate hike expectations in determining the Federal Reserve's trajectory. The Consumer Price Index report is due on Friday and the Producer Price Index reading is scheduled for Thursday.