December S&P 500 E-Mini futures (ESZ26) are down -0.56%, and December Nasdaq 100 E-Mini futures (NQZ26) are down -1.08% this morning as oil prices climbed amid fading hopes for U.S.-Iran diplomacy, pushing Treasury yields higher and sapping risk appetite.
The price of WTI crude jumped over +4% on Monday after U.S. President Donald Trump told Fox News on Saturday that he rejected Iran’s latest proposal to reopen the Strait of Hormuz as “unacceptable.” Meanwhile, Iran said it would not soften its demands for reopening the strait. President Trump told Axios in an interview on Sunday that Iran had overplayed its hand, while adding that he expects U.S.-Iran talks to resume this week.
Treasuries fell across the curve as the surge in oil prices reignited inflation concerns, with traders increasing bets on Federal Reserve interest-rate hikes. The 10-year T-note yield jumped seven basis points to 5.24%.
Chip and AI infrastructure stocks bore the brunt of the selling in pre-market trading, weighed down by rising bond yields and OpenAI’s announcement late Friday that it paused training of its latest AI models over safety concerns. Intel (INTC), Sandisk (SNDK), and Marvell Technology (MRVL) were each down over -3%.
This week, investors will focus on key U.S. economic data, including the nonfarm payrolls report and the Fed’s preferred inflation gauge, remarks from Fed officials, and earnings from memory-chip maker Micron Technology.
In Friday’s trading session, Wall Street’s major equity averages closed in the green as oil prices declined amid hopes for progress toward a U.S.-Iran agreement to reopen the Strait of Hormuz. Chip and AI infrastructure stocks climbed, with Microchip Technology (MCHP) rising over +5% to lead gainers in the Nasdaq 100 and ON Semiconductor (ON) advancing more than +5%. Also, Microsoft (MSFT) rose over +3% and was the top percentage gainer in the Dow after the tech giant introduced new capabilities for its AI assistant, Copilot. In addition, People Inc. (PPLI) surged more than +11% after The Wall Street Journal reported that MGM Resorts was considering a bid for the company. On the bearish side, cybersecurity stocks sank, led by a more than -10% slump in Zscaler (ZS) after the company promoted Ross Tackett to chief revenue officer.
Economic data released on Friday were mostly better than expected, supporting equities. U.S. durable goods orders were unchanged m/m in August, stronger than expectations of -0.3% m/m, while core durable goods orders, which exclude transportation, rose +0.3% m/m, weaker than expectations of +0.6% m/m. Separately, the University of Michigan’s U.S. September consumer sentiment index was unexpectedly revised upward to 48.1, stronger than expectations of a downward revision to 47.4.
Investors also parsed the latest comments from Fed officials. New York Fed President John Williams said on Friday that the central bank must bring inflation back to target and cannot overlook supply shocks if their impact on prices is persistent. Also, Cleveland Fed President Beth Hammack said there is a risk that businesses and households could become tolerant of above-target inflation and that the Fed should maintain a restrictive policy stance to achieve price stability.
U.S. rate futures are currently pricing in a 70.3% chance of a 25-basis-point rate hike and a 29.7% chance of no rate change at the conclusion of the Fed’s October meeting.
The U.S. September nonfarm payrolls report and the August core personal consumption expenditures price index, the Fed’s preferred inflation gauge, will be the main highlights this week. Economists expect the key jobs report to show the unemployment rate holding steady at 4.1% while payrolls increase by 98K after recording their largest gain since March in the previous month. Meanwhile, economists forecast the core PCE price index to rise +0.3% m/m and +3.4% y/y in August, accelerating from July on both a monthly and annual basis. Market participants will scrutinize the PCE and jobs reports to reassess expectations about whether the Fed will deliver a back-to-back interest-rate hike at its October meeting. Other noteworthy data releases include JOLTS job openings, GDP (third estimate), the Conference Board’s consumer confidence index, the S&P/CS HPI Composite - 20 n.s.a., ADP nonfarm employment change, personal spending, personal income, the Chicago PMI, initial jobless claims, the ISM manufacturing PMI, construction spending, and factory orders.
Alongside a raft of economic data, numerous Fed officials are scheduled to speak this week as investors continue to look for clues on the central bank’s interest-rate outlook. Fed Vice Chair Philip Jefferson, Fed Vice Chair for Supervision Michelle Bowman, Fed Governors Lisa Cook, Michael Barr, and Christopher Waller, Richmond Fed President Tom Barkin, Chicago Fed President Austan Goolsbee, St. Louis Fed President Alberto Musalem, New York Fed President John Williams, Minneapolis Fed President Neel Kashkari, Boston Fed President Susan Collins, Kansas City Fed President Jeff Schmid, and Dallas Fed President Lorie Logan will all make appearances.
In addition, investors will closely watch memory-chip maker Micron Technology’s (MU) fiscal fourth-quarter earnings this week, which will serve as a key test for the broader AI trade. Micron’s fiscal 2027 guidance for gross margins and capital spending will be a particular focus. Technology consulting firm Accenture (ACN), sportswear giant Nike (NKE), and cruise operator Carnival (CCL) are the other major companies set to report quarterly results this week.
Elsewhere, OpenAI will host its DevDay on Tuesday, while U.S. President Donald Trump, House Speaker Mike Johnson, and technology executives are scheduled to hold separate discussions on AI.
The U.S. economic data slate is largely empty on Monday.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 5.24%, up +1.37%.
The Euro Stoxx 50 Index is down -0.05% this morning, pressured by rising oil prices, though losses were limited by a rally in U.K. homebuilders. Mining stocks slid on Monday as metal prices slumped. Chip-related stocks also declined. At the same time, shares of U.K. homebuilders surged after the government announced a new equity loan program in England to help first-time buyers. In addition, energy stocks advanced, tracking the rise in oil prices. Meanwhile, Eurozone government bond yields climbed on Monday as higher oil prices revived inflation concerns. Investor focus this week is on the Eurozone’s preliminary inflation data for September. Economists forecast the Eurozone’s September CPI to accelerate to +3.7% y/y, its highest level in three years, driven by higher energy costs. Such an outcome would strengthen the case for a third interest-rate hike this year by the European Central Bank. The Eurozone’s business and consumer survey for September, the final September manufacturing PMI, and the August unemployment rate will also draw attention. In addition, several ECB policymakers are scheduled to speak this week, including President Christine Lagarde, Chief Economist Philip Lane, and Executive Board member Isabel Schnabel. In corporate news, Danieli (DAN.M.DX) tumbled over -12% after the iron and steel factory equipment maker reported weaker-than-expected annual earnings.
The European economic data slate is mainly empty on Monday.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -1.67%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.73%.
China’s Shanghai Composite Index closed sharply lower today, weighed down by weakness in the tech sector. Chipmakers tumbled on Monday after The Information reported that Beijing signaled it may allow domestic companies to purchase certain Nvidia chips. Also, shares of optical companies plunged after a bipartisan group of U.S. lawmakers introduced legislation on Friday that would prohibit the federal government from using Chinese-made data-transmission components in sensitive government systems. Sentiment was further dampened by data showing that growth in China’s industrial profits slowed sharply in August. Industrial profit rose 4.2% in August from a year earlier, slowing from the 11.2% growth rate recorded in July due to a high base effect, according to the National Bureau of Statistics. Meanwhile, the high-profile summit between U.S. President Donald Trump and his Chinese counterpart Xi Jinping delivered few surprises for markets, including anticipated tariff relief on roughly $30 billion of goods and an extension of the trade truce until January. Investor attention now shifts to China’s PMI gauges for September. Economists expect the official PMI surveys to show improvement in both the manufacturing and services sectors, with the manufacturing gauge expected to climb above the 50 mark, the threshold separating expansion from contraction. The RatingDog PMI surveys, which place greater emphasis on China’s smaller private-sector companies, will also be closely watched.
Japan’s Nikkei 225 Stock Index gave up earlier gains and closed lower today, snapping a five-session winning streak. Pharmaceutical and chemical stocks were among the biggest losers on Monday. Some chip-related stocks also fell, tracking losses in Nasdaq 100 futures. Takamasa Ikeda at GCI Asset Management said part of the Nikkei’s decline was driven by investors selling stocks to rebalance their portfolios at the end of the first half of the fiscal year. Data released on Monday showed that a key measure of Japan’s service-sector inflation rose in August at its fastest annual pace in more than two years, underscoring growing price pressures that will keep the Bank of Japan on course for further interest-rate hikes. Meanwhile, minutes from the BOJ’s July meeting released on Monday showed that many policymakers saw the need to pay closer attention to mounting inflation risks, with some advocating a faster pace of interest-rate hikes. Japan’s two-year government bond yield approached the key 2% level on Monday as investors increased bets on further BOJ rate hikes. Kazuo Momma, a former executive director responsible for monetary policy, told Bloomberg that the central bank could raise its benchmark rate for a second consecutive month in October. In corporate news, Nidec Corp. tanked over -17% after Diamond reported that the company plans to record an impairment charge of about 1 trillion yen ($6.3 billion) and has removed Chief Executive Officer Mitsuya Kishida. Investor focus this week is on Japan’s third-quarter Tankan survey, which is expected to show sentiment among the country’s largest manufacturers improving to the most optimistic level since December 2017. The BOJ’s summary of opinions from its September meeting will also attract attention. In addition, market participants will closely watch Tokyo core CPI for September, along with industrial production and retail sales figures for August. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +35.52% to 27.51.
The Japanese August Corporate Services Price Index rose +3.7% y/y, stronger than expectations of +3.6% y/y.
Pre-Market U.S. Stock Movers
Chip and AI infrastructure stocks sank in pre-market trading. Intel (INTC), Sandisk (SNDK), and Marvell Technology (MRVL) were each down over -3%.
Mining stocks slid in pre-market trading as metal prices slumped. Hecla Mining (HL) and Coeur Mining (CDE) were down over -5%, while Freeport-McMoRan (FCX) was down more than -4%.
Roblox (RBLX) declined over -3% in pre-market trading after Jefferies downgraded the stock to Underperform from Hold with an unchanged price target of $38.
Boeing (BA) dropped more than -2% in pre-market trading after The Wall Street Journal reported that the plane maker identified a software issue that could disrupt an automated landing feature.
Energy stocks advanced in pre-market trading, tracking the rise in oil prices. Occidental Petroleum (OXY), APA Corp. (APA), and Devon Energy (DVN) each rose over +2%.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - September 28th
Jefferies Financial Group (JEF), Vail Resorts (MTN), IDT Corporation (IDT), Sangoma Technologies (SANG).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
