Traders work on the floor of the New York Stock Exchange (NYSE), May 10, 2023.
Brendan McDermid | Reuters
Stock futures fell on Sunday as the attack on Israel by Palestinian militants adds geopolitical risk to an already fragile market grappling with inflation and rising interest rates.
Futures linked to Dow Jones Industrial Average fell 207 points, or 0.6%. S&P 500 Futures fell 0.7%, while Nasdaq 100 Futures fell 0.6%.
The Palestinian-Israeli conflict escalated into a full-blown war on Saturday after the Hamas militant group staged an invasion, apparently taking Israel by surprise. Israeli Prime Minister Benjamin Netanyahu stated that Hamas "will pay a price it has never known before."
WTI crude oil futures rose 2% in early trading on Sunday.
Rising geopolitical tensions could have ramifications for the energy market, with some experts predicting a "knee overstrain" in oil. The rising tension could also serve to stoke greater volatility in the market that has kept traders worried about persistent inflation and higher interest rates.
Oil prices fell significantly below $90 per barrel last week, with raw brent falling approximately 11% and US West Texas Intermediate registering a drop of 8%. While neither Israel nor Palestine are major players in the global energy landscape, both nations are located in a key oil region that could have broader implications. OPEC+, the oil cartel that includes non-OPEC member Russia, Will remain cautious on any moves to further expand oil production and change cutback plans, Saudi Arabia's energy minister, Prince Abdulaziz bin Salman, told CNBC on Sunday.
Since the bond market closed on Monday for Columbus Day, Wall Street will have to wait until Tuesday for an update on interest rates.
The three main indices ended last week higher despite a better-than-expected jobs report that initially sent Treasury yields higher and sent stocks tumbling. A better-than-expected jobs report for Friday showed that hiring remains strong, with the economy adding 336,000 jobs last month. Meanwhile, wages grew at a largely moderate pace, giving investors hope that inflation was cooling.
Bond yields eased a bit as stocks rose on Friday, but the 10-year Treasury yield hit a 16-year high earlier in the week.
