Futures Plummet as Oil Tops $100/Barrel; Treasury Yields Jump on Stagflation Fears; Dollar Strengthens

Stock futures sold off sharply and Treasury yields jumped as the price of oil surpassed $100 a barrel Monday, as investors fretted that the ongoing Iran war could slow the U.S. economy.

Dow Jones Industrial Average and Nasdaq 100 futures were down 1.1% each and S&P 500 futures were 1.0% lower in recent trading.

Major stock indexes closed lower for a second straight week Friday, with the Dow dropping 3% over the five days, its worst week since last April. The S&P 500 ended down 2% for the week, while the Nasdaq finished 1.2% in the red.

Oil futures have soared since the U.S. and Israel launched military strikes against Iran on Feb. 28, with West Texas Intermediate crude futures, the U.S. benchmark, surged as high 35% last week—their biggest weekly gain since they began trading in 1983—as tanker traffic has essentially halted through the Strait of Hormuz.

WTI futures jumped a further 11% to $101 a barrel Monday, when finance ministers from the Group of Seven advanced economies were set to discuss possibly releasing strategic reserves to alleviate the supply crunch.

Shares of U.S. carriers Delta Air Lines (DAL), United Airlines Holdings (UAL), and American Airlines Group (AAL)—whose fuel expenses are their biggest aside from labor—pulled back 2% to 4% before the bell, while those of cruise operators Norwegian Cruise Line Holdings (NCLH), Carnival (CCL), and Royal Caribbean Group (RCL) similarly retreated. Share of all of the Magnificent Seven tech giants also pointed lower.

The yield on the 10-year Treasury note, which affects interest rates on all sorts of consumer loans, climbed to 4.18% from Friday’s close of 4.13% amid fears the surge in oil prices could lead to stagflation. On Friday, the U.S. unemployment rate ticked higher to 4.4% when it was expected to stay at 4.3%, and Chicago Fed President Austan Goolsbee said an oil-price shock coupled with a sustained rise in the unemployment rate would create “exactly the kind of stagflationary environment that’s as uncomfortable as any that faces a central bank,” The Wall Street Journal reported.

The U.S. Dollar Index, which tracks the value of the greenback against a basket of currencies, was 0.4% higher at 99.35, with the greenback rising sharply against the euro, yen, and pound.

Gold futures slipped 0.8% to $5,115 an ounce, while silver futures were ticked lower to $84.25 an ounce. Bitcoin was trading around $67,900, up from overnight lows around $65,600.

Hims & Hers Health (HIMS) shares skyrocketed more than 50% in premarket trading after Bloomberg reported, citing a person familiar with the matter, that the company and Novo Nordisk (NVO) were set to announce an agreement for the compounding pharmacy to sell the Danish firm’s weight-loss drugs on the Hims platform. U.S.-listed shares of Novo Nordisk, which sued Hims & Hers last month for selling a copycat version of its new Wegovy weight-loss pill, were up 1%.

Shares of Hewlett Packard Enterprise (HPE), Vail Resorts (MTN), and Casey’s General Stores (CASY) all were down 1% to 2% ahead of their quarterly results after markets close.