Oil Price Surge Dents US Stock Futures, Inflation Concerns Rekindled

US stock futures plummeted on Monday due to rising oil prices and Treasury yields, causing inflation concerns to resurface. The Dow Jones Industrial Average (Dow) futures slid by 305 points or 0.5%, while Nasdaq 100 futures dropped around 1%.

The surge in oil prices, particularly Brent crude climbing towards $108 a barrel, has investors worried about the impact on inflation and interest rates. This is especially concerning for technology shares, which have been under pressure due to higher long-term yields. The 10-year Treasury yield held steady at around 5.2%, near its highest level since 2007.

The upcoming US inflation and jobs data may also influence the Federal Reserve's decision on interest rates. Markets are pricing a 66% probability of another rate increase in October, following September's quarter-point hike. The Personal Income and Outlays report, including the Fed's closely watched PCE inflation gauge, will be released on Wednesday.

The trade war between Washington and Beijing has provided some relief, with both countries agreeing to tariff reductions covering $60 billion of bilateral trade and extending their trade truce for two months through January 10. However, this has not been enough to offset the negative impact of rising oil prices and Treasury yields.