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Happy Monday. Stock futures were falling, pulled down by surging oil prices, sinking AI stocks and escalating hostilities in the Middle East, as investors gear up for this week’s Federal Reserve meeting.
“Markets are starting the week on a defensive footing, with the combination of another escalation in the Middle East and increasingly hawkish central-bank expectations weighing on risk appetite,” said Daniela Hathorn, senior market analyst at Capital.com. “Oil is once again the biggest geopolitical story.”
“Brent has jumped more than 3% toward $106, having already gained almost 9% last week, after fresh attacks on shipping in the Strait of Hormuz and a drone strike prompted Saudi Arabia to temporarily shut its East-West pipeline.”
The Federal Open Market Committee is scheduled to meet this week, with its interest-rate decision and press conference set for Wednesday.
“The oil shock is feeding directly into the rates story,” Hathorn said. “Friday’s hotter CPI report pushed markets to price roughly an 85% probability of a 25-basis-point Fed hike on Wednesday, with another hike increasingly expected before year-end.”
Nvidia (NVDA), AMD (AMD) and Sandisk (SNDK) were falling after Anthropic CEO Dario Amodei published an essay urging the AI industry to slow the development of frontier models over safety concerns.
Stocks finished higher on Friday, breaking a four-day losing streak as oil prices fell and inflation data met expectations.
