US Market: DJIA, Nasdaq, S&P 500 Futures Fall On Monday; How Wall Street Will React To New Sanctions On Iran?

The US stock market futures traded lower on Monday as investors turned cautious amid a surge in Treasury yields. This also comes after Wall Street recorded a bearish last week, with all indices, Wall Street, S&P 500, and Nasdaq Composite, falling by 1-2%. The 30-year benchmark US Treasury yield is at a 20-year high, and the 10-year yield is at 20-month high, while oil prices have remained elevated, fueling inflation concerns. Further, the uncertainty around West Asia has continued to drag the market. In the latest update, the US is likely planning to announce new sanctions on Iran.

US Stock Futures

At the time of writing, the Dow Jones futures dropped by 23 points, or 0.043% to trade around 53,328. While the Nasdaq 100 futures slipped more than 100 points to struggle around 29,260 levels. Further, the S&P 500 futures is down by 8 points to trade around 7,683.25.

On Monday, US stock futures are under pressure due to sharp rise in treasury yields as uncertainties rise in West Asia. The 30-year old US treasury yield jumped to 5.3%, which is highest level in over 20 years. Not just the USA, treasury yields in other countries like Japan, France and Germany are also at multi-year highs.

Investors remained concerned that the prolonged US-Iran conflict could keep oil prices elevated and fuel inflation, limiting the scope for lower interest rates. Meanwhile, Treasury Secretary Scott Bessent is set to announce new sanctions on Iran, while markets await the July PCE inflation report and Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole symposium later this week. Nvidia and Marvell Technology earnings will also be closely watched this week, as per Trading Economics.

US-Iran Sanctions:

Iran has condemned the USA's plan of new sanctions on them. As per a Reuters report, during the weekend, Iran denounced the new sanctions, stating that they will add on to the strain on the Islamic Republic's economy and have an impact ​on its most important trading partners, including China.

Iran stated that oil shipments are already at a standstill at the Strait of Hormuz, a global oil and gas supply chokepoint, while the Islamic regime's economy is already under immense pressure from the sanctions. Notably, Tehran has continued to threaten oil tankers at Hormuz for transit.

On Monday, Bessent said, the new sanctions on Iran will be the toughest in history. While the Iran's Foreign Ministry ​spokesperson, Esmaeil Baghaei said, "The United States' declaration of new economic sanctions on Iran is far more than continued unlawful "economic warfare" against a single country. It is an assertion of extraterritorial sovereignty over every independent Member State of the United Nations."

Baghaei added, "No State may lawfully compel foreign banks, enterprises, or airports - each subject to the exclusive jurisdiction of its own sovereign - to renounce lawful commerce with a third State."

"Such secondary sanctions find no foundation in international law," said the Iran minister. He added, "When combined with a naval blockade amounting to military aggression, these demands reduce the sovereignty of all other States to something provisional, conditional, and revocable at the whim of another power. Compliance purchases no immunity or respect; it merely concedes that one's banks, enterprises, and airports operate only under a foreign licence."

How Will Wall Street React On Monday, August 24?

During the trading week of August 17-21, the Dow Jones tumbled 386.10 points or 0.72% and the S&P 500 index plummeted by 116.31 points or 1.49%. But the tech-heavy index, Nasdaq took the worst beating, by crashing 604.20 points or 2.3%.

At present, Dow Jones hold at 53,277 level, while Nasdaq Composite and S&P 500 index stood around 26,180 and 7,674 respectively.

In its weekly outlook report, Charles Schwab Treasury yields remained elevated, particularly on the long end of the curve, and investors continued to monitor developments in the Middle East. Despite these concerns, equity markets demonstrated resilience as strong technical trends, supportive sentiment, and continued risk appetite helped offset the headwinds. Volatility remained relatively subdued, with the VIX falling to an eight-month low during the week, suggesting investors have grown increasingly comfortable with both the macro backdrop and geopolitical risks.

What is understood is that the market is already pricing and factoring the West Asia impact, and it could face more tailwinds from a surge in treasury yields rather than sanctions.

"The broader market tone, however, remained cautious as the prospect of fresh U.S. sanctions against Iran and persistent geopolitical uncertainty continued to restrain investor risk appetite," said Ponmudi R, CEO of Enrich Money.

Furthermore, Hitesh Tailor, Technical Research Analyst at Choice Broking said, "Global cues are relatively supportive as U.S. equities ended higher on Friday, while early Asian markets remain mixed. Oil prices have eased ahead of expected U.S. sanctions on Iran, although Brent remains elevated near $93, keeping geopolitical risks relevant. Investors will also track Nvidia's earnings and Fed Chair Kevin Warsh's Jackson Hole speech later this week."

On Monday, there are no earnings scheduled. However, Chicago Fed National Activity Index will be released.

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