US Stocks Tumble as Iran Tensions Escalate

US stocks are facing a weak start on Tuesday as tensions between the US and Iran escalate, raising concerns over inflation. The Dow Jones Industrial Average (DJIA) is expected to open lower, with futures down 0.1%, while S&P 500 futures are up 0.47% and Nasdaq futures are down -1.2%. European markets are also weak, with the FTSE down 0.2% and DAX down 0.5%. The main catalyst for today's decline is President Trump's decision not to extend the ceasefire with Iran, which has pushed oil prices higher. Brent crude is trading near $90 a barrel, while WTI is around $85.

The rising oil prices are contributing to higher inflation concerns, pushing up Treasury yields. The 10-year Treasury yield is at its highest level since January 2025, while the 30-year Treasury yield has reached its highest level since 2007. This has led to a rise in longer-term borrowing costs, which could weigh on the economy.

The Federal Reserve's (Fed) upcoming meeting minutes will provide further insight into the central bank's view on inflation and interest rates. Markets are currently pricing in a 96% probability of at least one Fed rate hike before the end of the year, but this is expected to be tempered by ongoing economic uncertainty.