Stock futures were lower on Tuesday morning as investors continued to monitor the conflict between Israel and Iran.
Futures tied to the Dow Jones Industrial Average declined 301 points, or 0.7%. S&P 500 futures dropped 0.6%, while Nasdaq 100 futures dipped 0.58%.
On Monday evening, Trump said in a Truth Social post that “Everyone should immediately evacuate Tehran.” U.S. stock futures turned lower afterward, and West Texas Intermediate crude futures advanced about 2% in overnight trading.
The three major averages ended Monday’s regular trading on a positive note, with the 30-stock Dow adding more than 300 points. The S&P 500 posted a roughly 0.9% advance, while the Nasdaq Composite jumped 1.5%.
Investor sentiment was aided by cooling oil prices, with Brent crude and West Texas Intermediate crude futures settling more than 1% lower. It was a turnaround from the sharp rally in oil prices on Friday following Israel’s airstrikes against Iran.
Though the attacks went into a fourth day on Monday, Iran reportedly asked several nations, including Saudi Arabia and Qatar, to urge U.S. President Donald Trump to put pressure on Israel for a ceasefire, a Middle East diplomat with knowledge of the matter told NBC News. The diplomat said the ceasefire would be in exchange for Iran’s flexibility on nuclear talks.
“[Israel’s] main short-term objective is to neutralize the Iranian nuclear threat. Longer term, the more difficult goal is to effect regime change, though it is not clear whether that will be achievable,” said Jeff Buchbinder, chief equity strategist at LPL Financial.
He added that while every conflict is different, an analysis of 25 geopolitical shocks dating back to the Pearl Harbor attack in 1941 showed that stocks have been resilient in these scenarios. Total drawdowns around these events have averaged 4.6% over an average of roughly 19 days, Buchbinder said.
“Recoveries to pre-event levels have taken longer, averaging 40 days, but we’re still talking about an interruption of only a few weeks to a couple months typically,” the strategist said.
On the economic front Tuesday, investors will watch for May’s retail sales data. The main event this week will be the Federal Reserve’s rate policy decision, which is due Wednesday afternoon. Fed funds futures trading data suggests a near certainty that central bank policymakers will hold rates at their current target range of 4.25% to 4.50%, according to the CME FedWatch tool.
