US stock futures fell with investors on edge as Israel and Iran continued to trade strikes against a backdrop of shifting US trade policy and stubborn interest rates.
Futures attached to the Dow Jones Industrial Average (YM=F) fell 0.3%. Futures attached to the benchmark S&P 500 (ES=F) sank 0.3% and the tech-heavy Nasdaq 100 (NQ=F) stumbled 0.3%.
On Monday evening, Trump called for the evacuation of Iran’s capital city, Tehran, as Israel pledged to continue attacking the country.
“Iran should have signed the ‘deal’ I told them to sign,” the president wrote on Truth Social. “IRAN CAN NOT HAVE A NUCLEAR WEAPON,” he continued, closing with, “everyone should immediately evacuate Tehran!”
Trump’s latest comments add to confusion about whether a cessation of hostilities is possible in the near term. Earlier in the day, stocks fluctuated but ended on a high note after The Wall Street Journal reported that Iran seeks to strike a ceasefire with Israel and return to the negotiation table on its nuclear program. The news eased some fears that the conflict could unfurl into a regional war, and oil prices slid, but uncertainty as to where the fast-moving conflict will go next persists.
While the situation between Iran and Israel dominated market moves on Monday, concerns over Trump’s trade policy and the direction of interest rates lurked in the background.
As the deadline for Trump’s pause on his most sweeping tariffs approaches, his administration is meeting with key trading partners at the G7 summit in Canada in hopes of striking deals. The first completed deal emerged Monday, after Trump and British Prime Minister Keir Starmer said they had signed the trade agreement they had landed on last month.
Read more: The latest on Trump’s tariffs
Even with the tariff pause in place as negotiations take shape, however, Trump’s trade policy has rattled retail sales and consumer confidence. On Tuesday, Investors will get fresh insight into how retail is faring amid tariff uncertainty with the May retail sales report, which is due for release at 8:30 a.m. ET.
Meanwhile, the Federal Reserve is set to issue its next decision on interest rates on Wednesday. A consistent refrain from policymakers this year has been that tariffs represent a stumbling block in terms of issuing interest rate cuts due to the potential for an uptick in inflation. New signs of cooling inflation, consequently, aren’t expected to convince the central bank to change directions; policymakers are expected to hold rates steady Wednesday.
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