TLDR
- U.S. forces struck Iranian rocket launchers in the Strait of Hormuz, pushing oil prices up over 2%
- Fed Chair Kevin Warsh’s Jackson Hole speech raised fears of near-term rate hikes
- Probability of a September Fed rate hike jumped to around 57-60%
- Dow futures fell 85 points, with S&P 500 and Nasdaq also down 0.2% in premarket
- Bond yields hit multi-year highs in Japan and Germany as inflation concerns spread globally
U.S. stock futures dropped Monday morning as a combination of military escalation in the Middle East and a hawkish Federal Reserve rattled investor confidence heading into the final day of August.
Dow futures fell 85 points, or 0.2%. S&P 500 and Nasdaq futures each dropped 0.2% in premarket trading.
Oil Prices Spike After U.S. Strikes on Iran
U.S. forces struck two Iranian rocket launchers on Larak Island in the Strait of Hormuz on Sunday. Iran responded by attacking U.S. forces in Jordan and claimed to have hit a tanker in the shipping lane.
🚨🇺🇸🇮🇷 BREAKING:
U.S. official, speaking to Axios:
"Earlier today U.S. forces struck two Iranian launchers on Larak Island.
Islamic Revolutionary Guard Corps forces were observed preparing to launch rockets with sea mines into Strait of Hormuz."
Source: @BarakRavid, Axios,… pic.twitter.com/xyAh2PNU6Z
— Mario Nawfal (@MarioNawfal) August 30, 2026
President Trump posted that Iran’s main oil export terminal on Kharg Island was being “blown to smithereens,” though there was no official military confirmation of that claim.
Brent crude rose 2.3% to $90.17 a barrel. West Texas Intermediate climbed 2.3% to $85.32. The Strait of Hormuz is a key global shipping route, and any disruption there tends to move oil markets quickly.
Fed Rate Hike Bets Jump After Warsh Speech
Fed Chair Kevin Warsh spoke at Jackson Hole on Friday and signaled that inflation risks remain underpriced. His comments pushed back expectations for rate cuts and raised the possibility of a rate increase.
Markets moved fast. The probability of a September rate hike jumped from around 40% a week ago to 57-60% by Monday morning, according to the CME FedWatch tool.
Barclays now expects the Fed to raise rates by 25 basis points at both the September and December meetings. JPMorgan’s chief U.S. economist said the September meeting is “live” but still expects the first hike in December.
Two-year Treasury yields held at 4.34% after jumping nearly 12 basis points on Friday. Japan’s 2-year bond yield hit a 31-year high. Germany’s 2-year yield reached its highest level since July 2024.
Higher rate expectations tend to compress valuations, especially for growth and tech stocks, which explains Monday’s early selling.
Despite the Monday dip, August overall has been positive. The Dow is up 2% for the month and heading for a fifth straight monthly gain. The S&P 500 is up nearly 3% and the Nasdaq has gained around 4%.
Key jobs data is due this week, including JOLTS Job Openings on Tuesday and the U.S. Employment Report on Friday. Earnings from Broadcom and Dell Technologies will also be watched as further reads on AI spending trends.
Gold slipped 0.3% to $4,437 an ounce but remains up roughly 10% for August.
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