U.S. stock futures declined on Monday, as the Dow Jones, S&P 500, and Nasdaq 100 indices fell, following Friday's higher close.
This tracked a sharp sell-off across Asian equities as surging U.S. Treasury yields and volatile crude prices weighed heavily on risk assets.
Meanwhile, oil prices climbed after President Donald Trump rejected a proposal to reopen the Strait of Hormuz. In response, Iranian Foreign Minister Abbas Araghchi warned that while Tehran wants to "forge peace," the nation is "fully prepared for the time for the war to be resumed."
Meanwhile, the 10-year Treasury bond yielded 5.22%, and the 2-year Treasury bond yielded 4.91%, at the last check. The CME Group's FedWatch tool projections show markets pricing in a 70.3% likelihood of the Federal Reserve hiking interest rates after its October meeting.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, fell in premarket on Monday. The SPY was down 0.51% at $767.38, while the QQQ declined 1.30% to $736.85.
Indonesia Energy
- Indonesia Energy Corp. (NASDAQ:INDO) was 3.55% higher in Monday premarket despite posting a first-half loss of 12 cents per share, versus a year-ago loss of 19 cents per share. The company's sales rose to $1.779 million from $1.070 million.
- MarketDash's Edge Stock Rankings indicate that INDO maintains a weak price trend in the short, medium, and long terms.
Eli Lilly
- Eli Lilly And Co. (NYSE:LLY) was 0.30% higher after it announced on Friday that the U.S. FDA has approved Olumiant (baricitinib), a once-daily pill, for pediatric patients 12 years of age and older with severe alopecia areata (AA).
- MarketDash's Edge Stock Rankings indicate that LLY maintains a strong price trend in the medium, short, and long term, with a poor value score.
PepsiCo
- PepsiCo Inc. (NASDAQ:PEP) was down 0.22% after it announced an investment of $1 billion in Colombia over the next five years.
- MarketDash's Edge Stock Rankings indicate that PEP maintains a weak price trend in the short, long, and medium terms, with a good quality score.
Jefferies Financial Group
- Jefferies Financial Group Inc. (NYSE:JEF) was 0.29% higher as analysts expect it to post quarterly earnings of 93 cents per share on revenue of $2.17 billion after the closing bell.
- MarketDash's Edge Stock Rankings indicate that JEF maintains a weak price trend in the long, short, and medium terms, with a moderate growth score.
Cues From Last Session
Information technology, industrials, and financial stocks posted the largest gains Friday, while energy and communication services bucked the broader trend to finish lower.
Insights From Analysts
Mohamed El-Erian highlights a striking divergence between a resilient U.S. stock market and rising economic headwinds. Despite surging bond yields topping 5%, U.S. equities have managed to "defy gravity," bolstered by strong earnings, "American technological exceptionalism," and overall "corporate agility and entrepreneurship." Overseas appetite for U.S. assets remains robust, insulating equity markets from the immediate pressures of higher borrowing costs.
However, El-Erian signals caution regarding the broader economy and future market stability. He notes a "widening divergence in the US between hard economic data and softer data," emphasizing weakening consumer sentiment alongside sticky, elevated inflation expectations. With Federal Reserve officials hinting at additional rate hikes, El-Erian warns that monetary tightening alone cannot solve price pressures, arguing central bank hikes shouldn't be the "only game in town."
Crucially, he flags a growing structural concern for financial stability: the heightened risk that "interest rate risk could mutate into credit risk" as corporate borrowers confront an "approaching maturity wall." Ultimately, while corporate earnings currently shield stocks, tightening financial conditions and economic fragmentation present persistent underlying risks.
Upcoming Economic Data
Here's what investors will be keeping an eye on this week.
- On Monday, Sept. 28, Federal Reserve Bank of New York President John Williams begins a two-day regional visit to Western New York.
- On Tuesday, Sept. 29, July's S&P Case-Shiller home price index data will be released by 9:00 a.m. ET.
- September's Conference Board consumer confidence index and August's Job Openings and Labor Turnover Survey (JOLTS) data will be out by 10:00 a.m. ET.
- Federal Reserve Bank of Chicago President Austan Goolsbee will speak at 1:00 p.m., and New York Fed President John Williams will speak at 2:00 p.m. ET.
- On Wednesday, Sept. 30, September's ADP national employment report will be released by 8:15 a.m. ET.
- The third estimate for second-quarter GDP, August's advance U.S. trade balance in goods, wholesale inventories, retail inventories, personal income, consumer spending, headline PCE, and core PCE price index data will all be out by 8:30 a.m. ET.
- September's Chicago business barometer data will be released by 9:45 a.m., and Chicago Fed President Austan Goolsbee will speak at 4:00 p.m. ET.
- On Thursday, Oct. 1, initial jobless claims for the week ending Sept. 26 will be released by 8:30 a.m. ET.
- September's U.S. manufacturing PMI data will be out by 9:45 a.m., and September's ISM manufacturing PMI alongside August's construction spending data will be released by 10:00 a.m. ET.
- On Friday, Oct. 2, September's employment report, unemployment rate, and average hourly earnings data will all be released by 8:30 a.m. ET.
- August's factory orders data will be out by 10:00 a.m. ET, and Dallas Fed President Lorie Logan will speak at a macroeconomic workshop.
Commodities, Crypto, And Global Equity Markets
Crude Oil WTI futures were trading higher in the early New York session by 3.31% to hover around $95.57 per barrel.
Gold Spot US Dollar fell 3.25% to hover around $4,146.37 per ounce. The U.S. Dollar Index spot was 0.14% higher at the 101.1150 level.
Meanwhile, Bitcoin (CRYPTO: BTC) was trading 2.10% lower at $82,861.65 per coin over the last 24 hours.
Asian markets were lower on Monday, except for Hong Kong's Hang Seng and Australia's ASX 200 indices. Japan's Nikkei 225, South Korea's Kospi, China's CSI 300, and India's Nifty 50 indices fell. European markets were higher in early trading.
