Stock futures slipped on Monday as renewed U.S.-Iran tensions over the Strait of Hormuz kept investors on edge, though losses remained contained amid a broader market rally. Dow Jones Industrial Average futures fell 0.4%, or 196 points, while S&P 500 and Nasdaq-100 contracts each dropped about 0.4%. The decline followed weekend developments in which the U.S. Navy seized an Iranian-flagged cargo ship in the Gulf of Oman, disabling its engine after it refused to comply with a naval blockade. President Trump confirmed the seizure on social media, stating the vessel was under U.S. Treasury sanctions due to prior illicit activity and warning that power plants and bridges in Iran could be destroyed if no deal was reached.
The incident reignited fears over disruptions to oil shipments through the Strait of Hormuz, a critical chokepoint for global energy supplies. Iran had previously declared the strait reopened following a ceasefire with Lebanon, but by Saturday, vessel traffic had stalled again, with Iranian state media accusing the U.S. Of failing to uphold its commitments. In response, the Islamic Revolutionary Guard Corps announced the strait was closed to all vessels, and reports emerged of Iranian small boats — referred to as a “mosquito fleet” — launching projectiles at passing ships. U.S. Central Command released video showing sailors aboard the USS Spruance issuing repeated warnings to the Iranian vessel M/V Touska before firing on its engine room, with audio capturing the command: “Motor vessel Touska, motor vessel Touska—vacate your engine room, vacate your engine room.”
Oil prices jumped in response, with West Texas Intermediate futures rising 5.7% to around $87 per barrel and Brent crude increasing 4.7% to near $95. Both benchmarks remained below the psychologically significant $100 level. Gold slipped 1.6% to $4,801.40 per ounce, while the U.S. Dollar edged higher against the euro and yen. The 10-year Treasury yield held steady at 4.248%, reflecting mixed signals from investors weighing inflation risks against demand for safe-haven assets.
For more on this story, see U.S. Navy Seizes Iranian Cargo Ship in Gulf of Oman, Triggering Market Sell-Off.
Despite the escalation, market losses were tempered by recent strength in equities. The S&P 500 had gained 4.5% the prior week, and the Nasdaq Composite notched its 13th consecutive winning session — a streak not seen since 1992 — pushing both indices to all-time highs. Analysts noted the market had become overbought in the short term, making it vulnerable to pullbacks amid shifting headlines. Peter Boockvar of OnePoint BFG Wealth Partners told CNBC that the key question for Monday trading was how deep the retreat would be, assuming no new developments emerged.
Looking ahead, investors are bracing for a week of major corporate earnings, with Tesla, Intel, and United Airlines set to report results. These releases will test whether equities can sustain their rally amid persistent geopolitical strain. Meanwhile, Treasury yields inched higher ahead of Senatorial confirmation hearings for Kevin Warsh, whose potential role in shaping Federal Reserve policy has drawn attention from fixed-income markets. The 30-year yield rose marginally to 4.89%, reflecting cautious positioning on long-term inflation and monetary policy outlook.
Amid the focus on macro risks, niche market movements also drew attention. Sandisk was added to the Nasdaq-100 after its stock surged 287% year to date, replacing software firm Atlassian in the index. However, the share slipped slightly on Monday, with some analysts flagging the rapid ascent in memory chip stocks — including Micron — as potentially overextended and vulnerable to a correction.
How did the U.S. Navy disable the Iranian vessel during the seizure?
The U.S. Navy’s USS Spruance fired multiple rounds from its 5-inch gun into the engine room of the Iranian-flagged M/V Touska after the vessel failed to comply with warnings over a six-hour period, disabling its propulsion system.
Why did oil prices rise despite remaining below $100 per barrel?
Oil prices increased due to renewed fears of supply disruptions in the Strait of Hormuz following the seizure of an Iranian ship and Iran’s decision to halt vessel traffic, though prices stayed below $100 as markets did not yet anticipate a full-scale blockade.
