Dow Futures Plunge 200+ Points After Hamas Attacks on Israel
The attack on Israel by Palestinian militants added geopolitical risk to an already fragile market coping with inflation and rising interest rates on Monday morning.
Futures associated with the Dow Jones Industrial Average fell 235 points, or 0.7%, on Tuesday. S&P 500 futures dropped 0.82 percent, while Nasdaq 100 futures fell 0.83 percent.
The Israeli-Palestinian conflict escalated into a full-scale war on Saturday, when the militant group Hamas launched an invasion that Israel appeared to be unprepared for. Benjamin Netanyahu, the Israeli prime minister, stated that Hamas “will pay a price it has never known before.”
Futures on WTI crude oil increased by 2% in early trading on Sunday.
Increasing geopolitical tensions may have an impact on the energy market, with some analysts predicting a “knee-jerk surge” in crude prices. The escalating tension may also increase market volatility, which has traders concerned about persistent inflation and rising interest rates.
Last week, oil prices fell significantly below $90 per barrel, with Brent crude falling roughly 11% and U.S. West Texas Intermediate falling 8%. While neither Israel nor Palestine is a significant player in the global energy landscape, both are located in a crucial oil region that could have far-reaching effects.
Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, told Sunday that OPEC+, the oil cartel that includes non-OPEC member Russia, will maintain a cautious stance on any movements to expand oil output further or alter cuts plans.
With the bond market closed on Monday for Columbus Day, Wall Street will not receive an update on interest rates until Tuesday.
Despite a stronger-than-anticipated employment report that initially drove up Treasury yields and sent stocks lower, all three major indexes ended last week in positive territory. A more robust-than-anticipated employment report released on Friday revealed that the economy added 336,000 jobs last month. Meanwhile, wages grew at a moderate rate, giving investors confidence that inflation was moderating.
The 10-year Treasury yield reached a 16-year high earlier in the week, despite a Friday decline in bond yields as equities rose.
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