U.S. stock index futures slipped on Tuesday, with oil holding near recent highs and government bond yields hitting multi-year peaks as chances of a peace deal between the U.S. and Iran waned, rekindling inflation concerns.
Iran said it would shift to a "fully offensive" military posture because efforts to negotiate a permanent end to the war with the U.S. have stalled, a senior Iranian official told Reuters. Washington, too, has ruled out extending a temporary ceasefire agreement that expired on August 17.
The developments pushed Brent crude futures LCOc1 up 0.4%, setting them on track for a third straight session of gains.
The yield on the 30-year Treasury bond US30YT=RR stood at its highest since 2007, while that of the benchmark 10-year maturity US10YT=RR held near its highest level since January 2025.
Heavyweight technology stocks came under pressure as high government bond yields potentially lower the present value of future tech profits and increase corporate borrowing costs.
Tesla TSLA.O and Nvidia NVDA.O led losses among growth stocks, falling more than 1% each in premarket trading. Meta Platforms META.O, Microsoft MSFT.O and Alphabet GOOGL.O were also trading lower.
Semiconductor and chip-related companies retreated after gains in the previous session. Micron Technology MU.O, Marvell Technology MRVL.O, Advanced Micro Devices AMD.O and Intel INTC.O slid between 2.6% and 4.8%.
Data storage companies Sandisk SNDK.O and Western Digital WDC.O dipped more than 5% each and were among the biggest decliners.
The CBOE Volatility Index .VIX, commonly dubbed as Wall Street's "fear gauge", jumped to its highest in about two weeks.
At 04:50 a.m. ET, Dow E-minis YMcv1 were down 79 points, or 0.15%, S&P 500 E-minis EScv1 were down 42.75 points, or 0.55%, and Nasdaq 100 E-minis NQcv1 were down 351.5 points, or 1.17%.
The benchmark S&P 500 .SPX closed lower in the previous session, backing away from record highs as higher crude oil prices revived inflation worries.
Money-market data showed traders still see a 96% chance of a 25-basis-points rate hike this year, though odds of an increase as soon as September have come down following tame inflation data last week.
Minutes from the Federal Reserve's July meeting due on Wednesday could offer more clues about how the central bank is assessing the current environment.
Markets will also closely parse Fed Chair Kevin Warsh's speech at the Jackson Hole symposium next week, given the central bank's stance on offering muted forward guidance.
Meanwhile, the quarterly earnings season was drawing to a close, with Home Depot HD.N scheduled to report before the bell on Tuesday.
The home improvement retailer's earnings could offer clues about the health of the U.S. consumer following weak July retail sales data. Retail bellwether Walmart WMT.O is set to report on Thursday.
Strong earnings across several sectors, including some of the AI hyperscalers, had lifted the S&P 500 and the blue-chip Dow .DJI to all-time highs earlier this month. The next test for the AI trade could be Nvidia's NVDA.O earnings due next week.
U.S. technology stocks have seen immense volatility in the past few months as investors remain nervous about whether hefty AI spending is paying off or not.
Media reports stated that Claude-creator Anthropic's annual revenue run rate topped $65 billion by the end of July, underscoring rapid growth ahead of a potential public listing later this year.
SPY•
