U.S. stock futures and government bonds fell while oil prices jumped Sunday evening after President Trump threatened renewed military strikes on Iran, unsettling investors just as the two countries opened high-level peace talks in Switzerland. Futures tied to the Dow Jones Industrial Average dropped 191 points, or 0.37%, while S&P 500 futures slid 0.52% and Nasdaq futures lost 0.74%. Treasury prices slipped as well, pushing yields higher.
The catalyst was a social-media post in which Trump warned the U.S. would strike Iran “very hard again” if it did not rein in its proxies in Lebanon, paired with a Fox News interview in which he raised the idea of seizing the Strait of Hormuz. Iranian state media said its delegation walked out of the talks at the Bürgenstock Resort near Lucerne. The negotiations were meant to harden into a lasting settlement a preliminary deal the two sides signed on Wednesday, which reopened the strait and set up nuclear talks. Vice President JD Vance, leading the U.S. side, struck a calmer note, telling reporters both sides had made “great progress.”
Market movers
The pullback in futures was broad but modest, reflecting a market that has learned to ride out the on-again, off-again drama of the U.S.-Iran standoff. Nasdaq futures led the declines as higher oil and firmer interest-rate expectations weighed on richly priced technology shares. The three main U.S. indexes had clawed back most of their war-era losses in recent weeks, leaving them exposed to any fresh shock. Asian equities, by contrast, edged higher as the first negotiating session wrapped up without a collapse, a sign overseas investors still expect a deal.
Commodities and volatility
Oil did the opposite of stocks. West Texas Intermediate, the U.S. benchmark, rose about 2% to $78.19 a barrel, while Brent crude climbed as much as 2% toward $81 before easing back near $80 as the talks avoided an immediate breakdown. The swing reflects the central fear hanging over the negotiations: that a collapse could choke off the Strait of Hormuz, the narrow channel that carries roughly a fifth of the world’s oil. Iran said over the weekend it had again closed the strait; U.S. Central Command countered that ships were still passing through. Gold, often a refuge in turmoil, fell 1.5% to about $4,180 an ounce as a steadier dollar and rising bond yields dimmed its appeal.
The drop in Treasuries went to the second worry rattling markets. Traders bet that costlier oil would keep inflation elevated and tie the Federal Reserve’s hands, so they sold government bonds and drove yields up. Consumer prices rose at a 4.2% annual rate in May, the hottest reading in more than two years, driven largely by energy. At its meeting last week, the Fed — now led by Chair Kevin Warsh — held its benchmark rate at 3.50% to 3.75% and stripped out earlier hints that cuts were coming. Bank of America economist Aditya Bhave had flagged that several policymakers might pencil in hikes this year, and markets, per the CME Group’s FedWatch gauge, now see a rate increase later in 2026 as more likely than a cut.
For households, the math is simple and unwelcome. Higher oil feeds straight into gasoline, which had only recently slipped back toward normal after topping $4 a gallon during the worst of the war. By one Brown University estimate, the conflict has already added more than $250 to the typical household’s energy bills. If the Strait of Hormuz closes for real and stays shut, pump prices climb, shipping and grocery costs follow, and the Fed has even less room to lower borrowing costs on mortgages, cars and credit cards.
Investors get their first full verdict when U.S. trading opens Monday. For now the pattern is familiar: every threat from Washington or Tehran sends oil up and stocks down, and every sign of progress sends them back. The difference this time is the calendar — with inflation already high and the Fed in no mood to cut, the economy has less cushion to absorb another oil shock than it did a year ago.
JBizNews Desk | New York
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