U.S. stock futures slipped early Tuesday as Wall Street opened September under the shadow of a weekend flare-up between the United States and Iran, which pushed crude oil toward its highest levels in months and clouded an otherwise resilient run for equities heading into the fall.
Dow Jones Industrial Average futures were down about 0.36%, S&P 500 futures fell 0.44% and Nasdaq-100 futures dropped 0.74% in early trading, extending losses from a bruising Monday session. The S&P 500 slid 0.33% to close at 7,686.14, the Nasdaq Composite eased 0.12% to 26,370.89, and the Dow shed 374.09 points, or 0.7%, to 53,185.90.
The pullback did little to dent what had otherwise been a strong month. The S&P 500 still finished August up 2.6%, the Nasdaq climbed 3.9%, and the Dow advanced 1.3% for its fifth consecutive monthly gain — a run that has left valuations stretched even as traders now confront a jumpier geopolitical backdrop.
Strikes Reignite Hormuz Risk
The renewed volatility traces to Sunday, when U.S. forces struck two Iranian rocket launchers on Larak Island in the Strait of Hormuz after Central Command said it detected preparations to fire rockets carrying sea mines into the waterway. It was the first publicly acknowledged U.S. strike on Iranian territory in weeks. Iran's Revolutionary Guard Corps retaliated with a missile-and-drone barrage on U.S.-linked bases in Jordan that it dubbed "Punishment of the Aggressor," an operation Al Jazeera reported Jordan's military said it largely intercepted.
The exchange, the first since late July, revived fears that further escalation could disrupt tanker traffic through a corridor that carries roughly a fifth of the world's seaborne oil. Brent crude rose 0.87% to $91.28 a barrel and West Texas Intermediate gained 0.94% to $86.57, extending a rally that has pushed Brent up more than 30% year over year and left it near its highest level since the spring, even after a partial cooling in prices earlier in the summer.
Data-Heavy Week Ahead
The renewed risk premium arrives just as investors brace for a run of economic data that could reshape expectations for the Federal Reserve's next moves. The Institute for Supply Management's manufacturing survey for August was due at 10 a.m. ET Tuesday, with economists expecting the index to cool slightly to around 55.2 from July's 55.6 reading, itself the strongest in more than four years. Factory respondents in recent months have continued to flag tariff-related input costs even as order books have held up.
A services-sector PMI follows Wednesday, and the week culminates Friday with the August jobs report; economists polled by Dow Jones expect nonfarm payrolls to have grown by roughly 53,000, a modest number that would keep alive the debate over how much further the labor market can cool before it becomes a drag on consumer spending.
The data will feed directly into positioning ahead of the Federal Reserve's September 16 meeting, where futures pricing has recently shown traders leaning toward the central bank holding rates steady, or even raising them, rather than delivering the cut many had penciled in earlier this summer. A hotter-than-expected ISM print or a firmer jobs number Friday could tilt that balance further, adding another variable for a market already digesting a fresh geopolitical shock.
Overseas, markets were mixed to lower. Japan's Nikkei 225 closed down 0.15%, Australia's S&P/ASX 200 slipped 0.10% and mainland China's CSI 300 fell 0.30%, while South Korea's Kospi bucked the trend with a 0.23% gain. Europe's Stoxx 600 was off 0.6% in midmorning trading, tracking the cautious mood set by the overnight developments in the Gulf.
For now, traders appear to be treating the Iran flare-up as a risk to monitor rather than a reason to retreat wholesale from equities coming off a strong August. But with oil prices climbing, a packed data calendar, and the Strait of Hormuz once again at the center of market conversation, strategists say the tolerance for fresh shocks is thinner than it was a month ago.
