US stock futures edged lower on Monday after President Donald Trump rejected Iran’s latest peace offer, souring risk appetite and pushing investors towards a more cautious start to the week.
The move came as markets continued to assess a stronger-than-expected April payrolls report, firmer oil prices and a busy slate of earnings and inflation data.
Dow futures plunged 50 points on Monday, while S&P 500 futures slipped nearly 0.1% and Nasdaq 100 futures fell 0.13%.
5 things to know before Wall Street opens
1. Futures are weaker after Trump rejected Iran’s peace offer
Risk sentiment took a knock after Trump described Iran’s latest peace proposal as “totally unacceptable”, dimming hopes of a near-term diplomatic breakthrough.
The market response was measured rather than disorderly, but futures still drifted lower as investors recalibrated for a higher-risk geopolitical backdrop.
The concern is not simply the immediate headlines.
A prolonged stand-off raises the chance of wider regional disruption, keeps pressure on shipping routes in and around the Strait of Hormuz and leaves traders with little confidence that tensions will ease quickly.
2. Payrolls beat forecasts, reinforcing the case for a patient Fed
The April jobs report gave markets another reminder that the US labour market is slowing only gradually.
Non-farm payrolls rose by 115,000, above expectations for 62,000, while the unemployment rate held at 4.3%, suggesting demand for workers remains reasonably resilient even as momentum cools from earlier in the year.
3. Oil is back in focus and that complicates the market outlook
Rising energy prices are once again becoming a central market variable.
US benchmark West Texas Intermediate crude has climbed sharply this month, with concerns over Middle East supply disruptions adding to fears that inflation could prove more persistent than investors had hoped.
That is a problem for stocks because higher oil can cut two ways.
Energy producers may benefit, but elevated crude also raises input costs, squeezes consumers and risks reviving inflation expectations at a time when the Fed is already wary of easing too soon.
4. Earnings season remains busy and guidance will matter most
Corporate earnings will remain a major focus for investors this week, with several high-profile companies scheduled to report results alongside key inflation data and ongoing geopolitical tensions.
Among the notable names reporting around Monday’s session are Barrick Mining Corporation, Fox Corporation and Figure Technology Solutions, while energy-related companies are also drawing attention as oil prices climb on Middle East supply concerns.
With US equities trading close to recent highs, investors are expected to focus less on whether companies beat earnings estimates and more on forward guidance and management commentary.
Markets will be watching closely for signs of how executives view consumer demand, pricing power, operating costs and the potential impact of higher energy prices on margins in the months ahead.
5. Tuesday’s inflation data could set the tone for the rest of the week
After payrolls and geopolitics, the next major test for markets is April inflation data on Tuesday.
Investors will be looking closely at whether higher oil prices are beginning to feed more clearly into the inflation picture and whether underlying price pressures remain sticky enough to keep the Fed on hold for longer.
That release could have a bigger impact than Monday’s modest move in futures suggests.
A hotter-than-expected print would reinforce the idea that the central bank has little room to soften its stance, potentially pushing yields and the dollar higher while weighing on equities.
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