US futures drop as Iran conflict dims rate cut prospects
US futures fell Monday as Middle East tensions pushed oil above $100. Investors are scaling back Fed rate cut hopes amid rising inflation fears and energy risks.
Stock index futures in the United States fell on Monday as the conflict in the Middle East intensified, threatening energy infrastructure and driving oil prices higher. The escalation has prompted investors to re-evaluate expectations for interest rate cuts, as rising energy costs renew fears of persistent inflation. The Revolutionary Guards of Iran issued a statement warning of potential strikes against power plants in Israel and facilities supplying American bases in the Gulf, should military threats against their own infrastructure be carried out.
The geopolitical tension pushed U.S. crude futures up by 3%, with prices climbing above $100 per barrel. This surge has complicated the outlook for monetary policy, leading market participants to dial back hopes for Federal Reserve easing. According to the CME Group’s FedWatch Tool, traders are no longer pricing in any rate cuts for 2026, a significant shift from the two reductions expected prior to the conflict. There is now a more than 50% chance of a rate hike in the latter half of the year.
