U.S. stock futures decline after turmoil in Iran causes sharp fluctuations on Wall Street

Investing.com - U.S. stock index futures declined Monday evening, after renewed hostilities between the U.S., Israel, and Iran triggered significant volatility on Wall Street.

Supported by strong business activity data, Wall Street rebounded from a sharp decline on Monday, ending slightly higher. Tech stocks also saw some bargain buying after a significant drop in February.

Market focus remains firmly on the Middle East conflict, with leaders from the U.S., Israel, and Iran all stating there are no plans to de-escalate hostilities. The U.S. and Israel launched attacks on Iran over the weekend, prompting fierce retaliation from the Islamic Republic.

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As of 8:00 p.m. Eastern Time (1:00 a.m. Beijing Time), the S&P 500 futures fell 0.3% to 6,867.0 points. Nasdaq 100 futures declined nearly 0.4% to 24,922.25 points, while Dow futures dropped 0.3% to 48,807.0 points.

U.S.-Iran Conflict Sparks Wall Street Volatility

Wall Street stock indexes rebounded sharply from intraday lows on Monday but closed modestly higher amid ongoing concerns over the worsening Middle East conflict.

Gains were led by technology stocks, with chipmakers performing strongly after a significant decline in February. Nvidia, a giant in artificial intelligence, rose 2.9% on Monday after falling 7.3% last month.

The S&P 500 closed flat, the Dow Jones Industrial Average fell 0.2%, and the Nasdaq Composite rose 0.4%.

Volatility remains elevated, with the CBOE Volatility Index surging nearly 8% on Monday.

U.S., Israel, and Iran continued strikes on Monday, with Washington stating there are no plans to halt attacks on the Middle Eastern country.

Iran retaliated by launching drones and missiles at Israel and several nearby countries. Iranian leaders also stated they do not intend to negotiate with the U.S.

Inflation concerns remain a major worry, especially as oil prices surged sharply due to hostilities. Markets fear sustained oil price increases could push global inflation higher and prompt major central banks to adopt more hawkish stances.

“Rising oil prices represent a negative supply-side shock, which could increase inflation and economic downside risks. The impact on the economy will depend on how long the conflict lasts,” said ANZ Bank analysts in a report.

U.S. February PMI Data Surpasses Expectations

ISM data released Monday showed that the U.S. February Purchasing Managers’ Index (PMI) exceeded initial expectations.

Manufacturing activity grew for the second consecutive month, with new orders significantly surpassing forecasts.

However, ISM data also indicated that manufacturing prices rose sharply in February, even before the energy shocks potentially caused by the Middle East conflict.

Just before this data was released, January producer inflation figures published last week were stronger than expected. This heightened concerns that the Federal Reserve may need to keep interest rates higher for longer to contain stubborn inflation.

Several Federal Reserve officials are scheduled to speak in the coming days, providing more clues about future interest rate policies.

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