US Stock Market:Will Dow Jones, Nasdaq, S&P 500 Extend Fall On Tuesday? Futures Fall, Yields & Oil Prices Rise

The US stock futures traded broadly lower on August 18, after Wall Street started the week on a bearish tone amidst elevated crude oil prices. Tensions mounting in the Middle East pushed treasury yields to highest level since 2007. Overnight, the Dow Jones and S&P 500 indices dropped 0.5% each, while the Nasdaq Composite and Nasdaq 100 slipped marginally. Treasury yields and oil prices continue to be a hindrance for the upcoming sentiments in Wall Street. On Tuesday, both US WTI and Brent crude oil surged 1% each, indicating a volatile start for Wall Street.

US Stock Futures Today

The Dow Jones futures currently traded at 53,472, down by 72 points. But the Nasdaq 100 futures crashed significantly by 230.50 points or 0.70% to trade around 29,865.50. Accordingly, the S&P 500 futures is down by 31.75 points or 0.41% to trade around 7,737.

As per Trading Economics, US stock futures fell further on Tuesday after the major averages started the week on a sour note, pressured by persistent tensions in the Middle East and rising Treasury yields.

US Treasury Yields + Crude Oil Prices Today

At the time of writing, US WTI crude is trading around $85.35 per barrel, registering an upside of 1%. Brent crude also soared by 1% to trade above $91.42 per barrel. Gasoline and natural gas prices are also 1% up each.

The 10-year US Treasury Yield skyrocketed to 19-month high to 4.75%, while the 30-year treasury yield touched its highest level since 2007 to 5.2%. This reflects concern for inflation in the long-term.

"We continue to see risks that Treasury yields could move higher from here," Cooper Howard, director of fixed income research and strategy at SCFR.

He cited lingering uncertainty around the inflation outlook, the possibility that the economy's neutral interest rate is higher than in the previous cycle, and persistent fiscal deficits.

Further, Schwab's note added that minutes from the last Federal Open Market Committee (FOMC) meeting arrive Wednesday afternoon and could bring more drama than usual considering three dissents at the gathering. Some dissenters spoke publicly last week, emphasising the need for near-term hikes.

Dow Jones + Nasdaq + S&P 500

Overnight, the Dow Jones index dropped by 272.63 points or 0.51% to close at 53,459.78. Similarly, the S&P 500 also dipped by 0.52% or 40.70 points to end at 7,745.06. Meanwhile, the Nasdaq Composite is down by 84.25 points or 0.32% to 26,644.91, and the Nasdaq 100 index slipped by 50.76 points or 0.17% to 29,995.38.

Explaining the reason behind the decline, Schwab's note said, oil, yields, and volatility rose, posing possible headwinds with no Iran resolution in sight. Investors also continue to mull Friday's surprise drop in July retail sales, which followed weak jobs data and could suggest consumer caution even as corporate results impress.

Wall Street Outlook On Tuesday

On Tuesday, economic data such as building permits, capacity utilisation, export prices, housing starts, import prices, industrial production, and pending home sales will be released.

Companies such as Amer Sports Inc. (AS), Baidu Inc. (BIDU), Hesai Group (HSAI), Home Depot Inc. (HD), Jack & Henry Associates Inc. (JKHY), Keysight Technologies Inc. (KEYS), Klarna Group PLC (KLAR), La-Z-Boy Inc. (LZB), Pony AI Inc. (PONY), Toll Brothers Inc. (TOL), VNET Group Inc. (VNET), and ZTO Express Inc. (ZTO) will be in focus for their quarterly results.

This earning season is 90% over and is broadly impressive, with gains witnessed not just in big tech companies but also in other sectors as well. A Bloomberg report revealed that of the 455 S&P 500 companies, 69% of them have surpassed estimates in the top-line front, while 87% have outperformed street expectations in terms of bottom-line.

"Despite the potential risks related to the Iran conflict, this continues to be a market driven by strong earnings growth, which continues to be fueled by investment in the AI infrastructure buildout," said Nathan Peterson, director of derivatives research and strategy at SCFR.

On the geopolitical front, Ponmudi R, CEO of Enrich Money said, uncertainty remains elevated after President Trump also threatened Oman, a key mediator in the Strait of Hormuz negotiations with Iran, raising fresh questions over the prospects for a diplomatic breakthrough. With the strategic shipping route remaining at the centre of the conflict, investors are likely to stay cautious until there is greater clarity on the geopolitical front.

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