US-Iran Tensions Spark Sharp Decline in Futures Amid Rising Oil Prices

U.S. stock futures fell sharply on Tuesday, opening a shortened trading week, as tensions between the U.S. and Iran continued to escalate. Oil prices surged after Iran warned that Gulf oil and gas infrastructure could be targeted in retaliation for strikes on its own assets.

The Dow Jones Industrial Average futures dropped 0.8% by 05:30 ET (09:30 GMT), while S&P 500 futures fell 0.3% and Nasdaq-100 futures slipped 0.1%. The U.S. markets were closed on Monday for Labor Day.

Major energy companies saw their shares rise in premarket trading, with Exxon Mobil up 1.8%, Chevron rising 1.7%, ConocoPhillips adding 1.6%, Diamondback Energy and Marathon Petroleum each climbing 1.1%, and Valero Energy increasing by 1.6%.

Eaton's stock gained more than 3% after UBS upgraded it to Buy from Neutral, citing strong sales growth and expected margin improvement in the third quarter and beyond.