Dow Gains While S&P 500 and Nasdaq 100 Slide Amid Iran Tensions
U.S. stock futures showed mixed movements on Monday, with the Dow Jones index gaining ground while the S&P 500 and Nasdaq 100 slipped. This followed a higher close on Friday, as geopolitical tensions continued to influence market sentiment. Iranian officials stated that the Strait of Hormuz would remain partially closed until Washington meets seven specified conditions, despite ongoing negotiations and recovering oil exports from the Persian Gulf. Brent crude prices held steady above $100 per barrel, supported by Tehran's warnings of escalated military responses to potential U.S. strikes, alongside plans for additional American troop deployments.
In the bond market, the 10-year Treasury yield stood at 5.25%, while the 2-year Treasury yield was at 4.79%. The CME Group’s FedWatch tool indicated a 20.5% likelihood of the Federal Reserve raising interest rates after its October meeting. Key ETFs tracking major indices, such as the SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust ETF (QQQ), also saw declines in premarket trading.
Several individual stocks made notable moves. Space Exploration Technologies Corp. (SPCX) rose 1.18% after completing three launches in under 13 hours, sending astronauts and other payloads into space. Qualcomm Inc. (QCOM) surged 3.96% following the filing of a prospectus for a 25 million common share offering. Vistra Corp. (VST) advanced 6.27% after reports of a potential $4 billion loan package from the Trump administration to upgrade its nuclear plants.
Analyst Mohamed El-Erian highlighted the fractured financial landscape, where stock market exuberance contrasts with underlying macroeconomic strains. He cautioned against ignoring bond market volatility, driven by long-term structural repricing, and emphasized the growing spillover of interest rate risk into credit and spread risk. Upcoming economic data, including the September S&P U.S. services PMI and ISM services PMI reports, will be closely watched by investors this week.