Pre-Market Update: Stock Futures Fall After Iran Claims Missile Strike on US Warship

TLDR

• US stock futures fell Monday after reports of Iranian missile strikes on a US warship near the Strait of Hormuz
• The US denied the Iranian media reports, which helped calm initial panic selling
• Oil prices surged over 3%, with Brent crude rising to nearly $112 a barrel
• Trump announced “Project Freedom” to escort ships through the waterway; Iran threatened retaliation
• The April jobs report is due Friday, with forecasts pointing to just 60,000 new positions

US stock futures dropped on Monday morning after Iranian state media reported that missiles had struck a US warship near the Strait of Hormuz. The reports triggered a brief sell-off before the US denied them.

Futures tied to the Dow Jones Industrial Average fell around 204 points, or 0.4%. S&P 500 futures slipped 0.2%, and Nasdaq 100 contracts fell 0.1%.

The S&P 500 and Nasdaq had both closed at record highs on Friday, capping their best five-week run since May 2020. That momentum stalled Monday morning on the geopolitical news.

Iran’s Fars News Agency claimed two missiles hit a US frigate that had ignored warnings not to enter the Strait of Hormuz. US Central Command posted on X that no navy ships had been struck.

The denial helped settle markets somewhat, but uncertainty remained. Investors moved into safe-haven assets, pushing the dollar up 0.3% against a basket of major currencies.

The yield on the 10-year Treasury note rose 4 basis points to 4.41%, another sign investors were seeking lower-risk positions.

Oil Prices Spike on Supply Fears

Oil markets reacted sharply to the news. Brent crude futures jumped 3.4% to $111.80 a barrel. West Texas Intermediate climbed 3.5% to $105.35 a barrel in early trading.

The Strait of Hormuz is one of the world’s most important shipping lanes. A large share of global oil supply passes through it, making any conflict there a direct concern for energy markets.

Trump’s “Project Freedom” Adds to Tension

On Sunday, President Trump said the US would begin escorting vessels trapped in the waterway. He called the operation “Project Freedom.”

The back-and-forth raised the risk of direct confrontation and kept traders on edge throughout the morning session.

On the corporate side, earnings season continues this week. Results are expected from semiconductor companies Lattice Semiconductor, Advanced Micro Devices, and Arm Holdings.

Palantir and Paramount Skydance are also set to report this week.

The April US jobs report is due on Friday. Economists are forecasting just 60,000 new jobs, down sharply from 178,000 in March. The unemployment rate is expected to hold at 4.3%.

US Central Command’s denial of the Iranian strike reports was the key factor that stopped futures from falling further in early Monday trading.

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