U.S. Stocks May Extend Sell-Off As Oil Prices Continue To Soar

Stocks are likely to move to the downside in early trading on Monday, adding to the steep losses posted last week. The major index futures are currently pointing to a sharply lower open for the markets, with the S&P 500 futures down by 1.0 percent.

The downward momentum on Wall Street comes amid an extended surge by the price of crude oil, which has skyrocketed above $100 a barrel for the first time since 2022.

Oil prices are extending last week’s spike amid ongoing concerns about the escalating conflict in the Middle East.

The continued increase comes following reports major oil producers Iraq, Kuwait and the United Arab Emirates are cutting production.

With the Strait of Hormuz effectively closed due to Iranian threats against tankers, the countries are purportedly running out of storage space.

In a post on Truth Social, President Donald Trump called the spike in oil prices a “a very small price to pay” for national security and claimed prices will “drop rapidly when the destruction of the Iran nuclear threat is over.”

“Tipping over the $100 a barrel level has major implications from a psychological and economical perspective,” said Dan Coatsworth, head of markets at AJ Bell..

He added, “It significantly raises the chances of a sharp jump in inflation and interest rates shifting to a completely different path than the market had priced in only two weeks ago.”

Stocks moved sharply lower during trading on Friday, adding to the losses posted in the previous session. With the steep losses on the day, the Dow and the Nasdaq dropped to their lowest closing levels in over three months and the S&P 500 hit a two-month closing low.

The major averages all finished the day firmly in negative territory. The Nasdaq plunged 361.31 points or 1.6 percent to 22,387.68, the S&P 500 tumbled 90.69 points or 1.3 percent to 6,740.02 and the Dow slumped 453.19 points or 1.0 percent to 47,501.55.

For the week, the Dow plummeted by 3.0 percent, the S&P 500 dove by 2.0 percent and the Nasdaq shed 1.2 percent.

In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Monday. Japan’s Nikkei 225 Index plummeted by 5.2 percent, while Hong Kong’s Hang Seng Index tumbled by 1.4 percent.

The major European markets have also shown significant moves to the downside. The French CAC 40 Index is down by 1.9 percent, the German DAX Index is down by 1.4 percent and the U.K.’s FTSE 100 Index is down by 1.1 percent.

In commodities trading, crude oil futures are skyrocketing $9.33 to $100.23 a barrel after soaring $9.89 to $90.90 a barrel last Friday. Meanwhile, after jumping $80 to $5,158.70 an ounce in the previous session, gold futures are slumping $48.40 to $5,110.30 an ounce.

On the currency front, the U.S. dollar is trading at 158.40 yen versus the 157.79 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1561 compared to last Friday’s $1.1618.