02.03.202600:04:40UTC+00US Futures Drop on Middle East War

US stock futures fell on Monday as an escalating conflict in the Middle East rattled financial markets. Over the weekend, the US and Israel launched military strikes on Iran that killed the country’s Supreme Leader, Ayatollah Ali Khamenei, and effectively shut the Strait of Hormuz. Tehran responded by attacking US assets across the region, including in the United Arab Emirates, Bahrain, Kuwait, Qatar, Saudi Arabia, Jordan, Iraq and Syria.

The geopolitical shock comes on top of an already fragile backdrop for equities. Wall Street ended last week under pressure, with investors increasingly concerned that the rapid adoption of artificial intelligence could undermine demand for traditional software providers. On Friday, the Dow Jones Industrial Average fell 1.05%, the S&P 500 lost 0.43% and the Nasdaq Composite declined 0.92%.

Adding to the uncertainty, US inflation data came in hotter than expected, suggesting that companies are passing higher tariff-related costs on to consumers. That trend further clouds the outlook for Federal Reserve interest-rate cuts.