- Dow Jones futures slip as investors monitored rising Middle East tensions.
- US military officials said they have destroyed IRGC posts, air-defense systems, and missile sites.
- Equity futures struggle as higher Treasury yields lift discount rates, pressuring stock valuations.
Dow Jones futures fall 1.26% to near 48,330 during European hours ahead of the US regular market open on Tuesday. S&P 500 and Nasdaq 100 futures decline 1.20% and 1.51% to near 6,800 and 24,650 at the time of writing.
US stock futures edged lower on Tuesday as investors tracked further escalations in the Middle East war. US military officials said on Tuesday that they have destroyed command posts of Iran’s Revolutionary Guards as well as Iranian air defense and missile launch sites since the start of the joint Israeli-US offensive on Saturday.
Ebrahim Jabari, senior adviser to the commander-in-chief of the Islamic Revolutionary Guard Corps, said: “The Strait of Hormuz is closed. If anyone tries to pass, the Revolutionary Guards and the regular navy will set those ships ablaze,” per Reuters.
In regular US trading on Monday, the Dow Jones Industrial Average fell 0.15%, while the S&P 500 and Nasdaq-100 rose 0.04% and 0.36%, respectively. Defense and energy stocks outperformed, with Northrop Grumman up 6%, Palantir Technologies gaining 5.8%, and Exxon Mobil rising 1.1%.
The 10-year yield rose to 4.07% after climbing 10 basis points, as escalating Middle East tensions boosted energy prices and inflation concerns. Equity futures struggle as higher Treasury yields increase the discount rate used to value future earnings.
Moreover, rising fuel costs intensified inflation concerns, prompting traders to reassess the outlook for Federal Reserve (Fed) policy. Expectations for the next Fed rate cut have shifted to September from July, though markets still price in two 25 basis point reductions.
