Key Takeaways:
U.S. stock-index futures slipped late Sunday while crude oil prices rose nearly 2 percent, as geopolitical tensions in the Persian Gulf stalled last week's market rally.
The moves come as Walmart executives warned earlier this year that gas prices between $4.50 and $5 a gallon, a level now reached according to AAA, could significantly impact retail sales.
Dow Jones Industrial Average futures fell around 100 points, or 0.2 percent, while S&P 500 futures were little changed. The CBOE Volatility Index (VIX) was last up 6.78 percent to 18.43, and the 10-year Treasury yield stood at 4.596 percent. West Texas Intermediate crude for June delivery jumped to over $107 a barrel.
The surge in energy prices, driven by the ongoing war with Iran, is fueling inflation concerns ahead of a crucial week of earnings from major retailers and chipmaker Nvidia that will provide fresh insight into the health of the U.S. consumer and the broader economy.
Oil prices shot higher Friday and continued their ascent Sunday after President Donald Trump’s trip to China yielded no breakthrough on de-escalating the conflict. While a cease-fire is largely holding, reports Sunday that Israel is coordinating with the U.S. over a possible resumption of airstrikes and a drone strike near a UAE nuclear facility have heightened market anxieties. In a social-media post Sunday, Trump warned Iran to agree to a peace deal, stating, “The Clock is Ticking.”
The conflict has sent fuel costs soaring, with the average gallon of gas in the U.S. hitting $4.51, according to AAA. This is feeding into broader inflation, which rose to 3.8 percent in April, the highest reading since May 2023 and well above the Federal Reserve's 2 percent target.
Investors are now looking to a heavy slate of quarterly reports for clues on consumer spending. Walmart, Target, Home Depot, and Lowe’s are all set to report this week. The results will be closely watched to see if higher energy costs have started to dent consumer demand, a scenario Walmart’s management has previously flagged.
The market will also focus on quarterly results from Nvidia on Wednesday. The chipmaker has been the single biggest contributor to the S&P 500’s earnings growth, according to Seaport Research, and its performance is seen as a key barometer for the technology sector and the broader market, which had seen the S&P 500 post gains for seven straight weeks.
This article is for informational purposes only and does not constitute investment advice.
