American stock futures retreated in subdued trading as August drew to a close, while crude oil prices surged following fresh military confrontations between the United States and Iran. Brent crude rallied nearly 4% to breach the $90 per barrel mark, with West Texas Intermediate climbing above $86.
Markets reacted sharply. S&P 500 futures dropped 0.2% and Nasdaq 100 contracts dipped 0.1% as of 8:00am Eastern Time. Energy giants Chevron and ExxonMobil each gained 2% on the back of rising oil prices, while most major technology stocks declined.
What does this mean for inflation and interest rates? The sudden jump in oil prices complicates the Federal Reserve’s monetary policy outlook, particularly after recent hawkish comments from officials at the Jackson Hole symposium. Treasury Secretary Bessent’s remarks on the Bank of Japan also drew attention, pushing the yen stronger against the dollar to below 160.
California utility stocks suffered heavy losses after state legislators introduced new wildfire liability measures. PG&E plunged 15% while Edison International fell 5.5%. Meanwhile, Science Applications International jumped 8% after raising its full year revenue guidance, and BioMarin Pharmaceutical climbed 4% on news of a patent settlement with Ascendis Pharma.
Traders now face a critical week of economic data releases, with employment figures and manufacturing surveys potentially influencing the Fed’s September policy decision.
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