U.S. stock index futures fell sharply on Monday, dropping more than 1% as oil prices surged and heightened concerns about inflation. The escalation of tensions in the Middle East continued to weigh heavily on global financial markets.
Crude oil prices jumped more than 25%, briefly approaching $120 per barrel, while the U.S. dollar strengthened as investors moved toward safe-haven assets. Rising energy costs have intensified fears that inflation could remain elevated, potentially forcing central banks to keep interest rates higher for longer. Reflecting these concerns, the yield on the benchmark U.S. 10-year Treasury note climbed to its highest level in over a month.
Geopolitical tensions increased further after Iran announced that Mojtaba Khamenei will succeed his father, Ali Khamenei, as the country’s supreme leader. The decision is widely interpreted as a sign that hardline leadership will remain firmly in control in Tehran.
Meanwhile, the conflict involving the United States, Israel, and Iran entered its tenth day with no signs of easing. Both sides have continued missile and drone attacks, raising fears that the situation could escalate further across the region.
A prolonged conflict in the Middle East could significantly disrupt global energy supplies and create additional pressure on the world economy at a time when the U.S. economy is already facing growing uncertainty.
Investor anxiety rose sharply, with the Cboe Volatility Index — commonly referred to as Wall Street’s “fear gauge” — jumping 5.16 points to 34.62, its highest level since April 2025.
Recent economic data has already unsettled markets. The U.S. labor market unexpectedly lost jobs in February, while the unemployment rate increased. Combined with the sharp rise in oil prices, these developments could place the Federal Reserve in a difficult position as it considers the timing of future interest rate cuts.
Markets are now preparing for a busy week of important economic data releases. Inflation figures are scheduled for Wednesday, followed by jobless claims, JOLTS job openings data, personal consumption expenditures (PCE) — the Fed’s preferred inflation measure — and a revised estimate of quarterly GDP later in the week.
The Federal Reserve’s next policy decision is expected on March 18. Current market pricing suggests that policymakers are likely to keep interest rates unchanged at that meeting.
Early Monday trading reflected the growing uncertainty. At 3:13 a.m. ET, Dow Jones E-mini futures were down 863 points, or 1.82%. S&P 500 E-mini futures fell 108.5 points, or 1.61%, while Nasdaq 100 E-mini futures dropped 407 points, or 1.65%.
Futures linked to the interest-rate-sensitive Russell 2000 index declined even more sharply, falling 3.1%.
Last week was already difficult for U.S. equities. The Dow Jones Industrial Average declined 0.95%, marking its steepest weekly drop since early April 2025. The S&P 500 fell 1.33%, its worst weekly performance since mid-October, while the Russell 2000 recorded its largest weekly loss since early August. The Nasdaq Composite also ended Friday lower, closing down 1.59%.
