NEW YORK, May 11, 2026, 07:07 EDT
U.S. stock-index futures, contracts that signal where shares may open, were little changed early Monday as oil prices jumped after President Donald Trump rejected Iran’s response to a U.S. peace proposal, putting inflation risk back in front of investors after last week’s record rally. At 05:44 a.m. ET, Dow futures were up 0.02%, S&P 500 futures were flat and Nasdaq 100 futures were up 0.03%; investors were also waiting for Tuesday’s consumer price index, a government measure of prices paid by households.
The timing is the problem. The S&P 500 and Nasdaq had closed at records on Friday, helped by artificial-intelligence stocks, strong earnings and a solid payrolls report. Now a fresh oil spike is testing whether that rally can absorb another inflation scare.
Brent crude futures rose $2.70, or 2.67%, to $103.99 a barrel at 0902 GMT, while U.S. West Texas Intermediate crude climbed $2.24, or 2.35%, to $97.66. John Evans, analyst at PVM Oil Associates, said the U.S. and Iran looked “as far away from agreement” as when the ceasefire began. Reuters
The Strait of Hormuz is why equity traders are watching oil so closely. The International Energy Agency says about 20 million barrels per day of crude oil and oil products moved through the waterway in 2025, around a quarter of global seaborne oil trade; it also carries major volumes of liquefied natural gas, or LNG, gas cooled into liquid form for tanker shipment.
Saudi Aramco said it had shifted some oil exports to its East-West Pipeline, which Chief Executive Amin Nasser said was “helping to mitigate” the shock. But AP reported the pipeline’s 7 million-barrel-a-day capacity is only part of Aramco’s usual output, leaving markets exposed if the strait stays constrained. AP News
The rate story moved with the oil price. BofA Global Research now expects no Federal Reserve cuts this year and two quarter-point cuts in July and September 2027. Goldman Sachs pushed its expected cuts to December 2026 and March 2027, later than its previous call for September.
The Fed has less room to look through the shock because the labor market has not cracked. The Bureau of Labor Statistics said U.S. payrolls rose by 115,000 in April and the unemployment rate held at 4.3%, with gains in health care, transportation and warehousing, and retail trade.
Pressure showed first where fuel costs hit margins fastest. Premarket trading showed Southwest Airlines and United Airlines down about 1%, with Delta Air Lines and American Airlines off 0.8%, as traders priced in more expensive jet fuel.
The oil shock did not erase the bullish earnings case. HSBC raised its year-end S&P 500 target to 7,650 from 7,500, citing resilient profit growth, but its strategists also warned that sentiment was on “shakier ground” after a narrow rally led by megacap technology shares. Reuters
Goldman had already flagged the equity risk from the supply shock. In a note cited by Investing.com last week, Goldman analyst Yulia Grigsby said oil exports through the Strait of Hormuz had fallen to just 4% of normal levels, while front-month Brent traded well above the bank’s fourth-quarter 2026 forecast.
The risk is that oil takes another leg higher just as Tuesday’s inflation data land. Han Tan, chief market analyst at Bybit, said “inflation risks still weigh heavy” after the latest U.S.-Iran impasse; a hotter CPI print would make it harder for traders to revive rate-cut bets. Reuters
There is a softer path, but it is political. Kenneth Broux, head of corporate research for FX and rates at Societe Generale, said markets still appeared to believe the conflict could be resolved, partly because of China’s involvement before Trump’s expected meeting with President Xi Jinping.
For now, Wall Street is not selling hard. It is hesitating. The AI and earnings trade is still alive, but $100-plus Brent has made the next inflation print matter more than another round of record closes.
