NEW YORK, May 11, 2026, 07:07 EDT
U.S. stock-index futures barely budged early Monday, with oil prices surging after President Donald Trump shot down Iran’s answer to a U.S. peace offer—an abrupt move that nudged inflation worries back onto the radar after last week’s record-setting rally. As of 05:44 a.m. ET, Dow futures ticked up just 0.02%, S&P 500 futures were unchanged, and Nasdaq 100 futures edged higher by 0.03%. Investors kept an eye on Tuesday’s consumer price index reading, the government’s main gauge of household prices.
The S&P 500 and Nasdaq set new records Friday, buoyed by artificial-intelligence names, upbeat earnings, and sturdy job numbers. But right now, another sharp jump in oil prices is throwing a wrench into that rally, reviving concerns about inflation. The timing couldn’t be trickier.
Brent crude futures jumped $2.70, up 2.67%, hitting $103.99 a barrel by 0902 GMT. U.S. West Texas Intermediate crude followed, adding $2.24, or 2.35%, to reach $97.66. “The U.S. and Iran looked as far away from agreement as when the ceasefire began,” said John Evans, analyst at PVM Oil Associates. Reuters
Equity traders have their eyes glued to oil, thanks to the Strait of Hormuz. According to the International Energy Agency, some 20 million barrels a day—crude and refined—passed through the strait in 2025. That’s roughly a quarter of all oil traded by sea. The strait is also a critical route for liquefied natural gas, or LNG, shipped in liquid state.
Saudi Aramco has rerouted part of its oil shipments to the East-West Pipeline in an effort to cushion the impact, according to Chief Executive Amin Nasser, who called the move “helping to mitigate” the shock. Still, as AP noted, the pipeline can handle up to 7 million barrels a day—well short of Aramco’s typical production—so if the strait remains restricted, the market remains at risk. AP News
Oil’s swing set the tone for rates. BofA Global Research has scrapped its forecast for Fed cuts this year, now projecting two 25-basis-point moves, but not until July and September 2027. Over at Goldman Sachs, cuts are off the table until December 2026 and March 2027, a shift from its earlier September estimate.
The Fed’s flexibility is limited here—labor hasn’t buckled. U.S. payrolls climbed by 115,000 in April, according to the Bureau of Labor Statistics, which also reported the unemployment rate steady at 4.3%. Health care, transportation and warehousing, and retail trade all posted gains.
The squeeze landed early in sectors most exposed to fuel costs. Southwest Airlines and United Airlines slipped roughly 1% in premarket trade, while Delta Air Lines and American Airlines each dropped 0.8% as investors reacted to pricier jet fuel.
The oil shock hasn’t derailed the earnings optimism. HSBC bumped its S&P 500 year-end target up to 7,650 from 7,500, pointing to sturdy profit growth. Still, strategists flagged that sentiment looks “shakier,” with gains clustered in a handful of megacap tech stocks. Reuters
Goldman previously highlighted the equity risks tied to the supply shock. Last week, Yulia Grigsby at Goldman wrote in a note cited by Investing.com that oil exports moving through the Strait of Hormuz had slumped to only 4% of their usual pace. Meanwhile, front-month Brent prices stood well above the bank’s forecast for the fourth quarter of 2026.
The concern: oil could spike again right as Tuesday’s CPI numbers drop. “Inflation risks still weigh heavy,” warned Han Tan, chief market analyst at Bybit, after the newest U.S.-Iran standoff. A stronger CPI would only complicate any hopes traders have for rate cuts. Reuters
A political solution remains on the table, but it’s not straightforward. Kenneth Broux, who heads corporate research for FX and rates at Societe Generale, noted that markets haven’t given up hope on a resolution—China’s role, plus the anticipation around Trump’s planned meeting with President Xi Jinping, keeps that view alive.
Wall Street isn’t dumping stocks—there’s a pause. Traders are still chasing AI names and earnings, but with Brent over $100, the next inflation release looms larger than another streak of record highs.
