Dow Jones and Nasdaq called lower as Trump says Iran ceasefire 'over'

• Dow futures down 1.1%, S&P 500 futures off 0.9%, and Nasdaq futures down 1.3% following US strikes on 80+ Iranian targets and revocation of Iran's oil export waiver
• West Texas Intermediate crude jumped 5.4% to $74.26 per barrel from $67 last week, fueling inflation fears across markets
• Traders now see over 85% probability of at least one 25-basis point Fed rate hike before year-end, a reversal from previous rate cut expectations

Market Summary: US-Iran Tensions Drive Market Decline

Market Movement:

US stock futures fell sharply Wednesday, with Dow Jones futures down 1.1%, S&P 500 futures off 0.9%, and Nasdaq futures declining 1.3%. The previous session saw the Nasdaq drop 1.2% to 25,819, the S&P 500 fall 0.5% to 7,504, and the Dow edge down 0.3% to 52,925.

Key Catalyst:

President Donald Trump declared the Iran ceasefire "over" following escalating military action. US forces struck over 80 Iranian targets including command centers, radar sites, and missile capabilities. The US Treasury revoked Iran's oil export waiver, prompting Tehran to resume attacks on Gulf neighbors Bahrain and Kuwait.

Oil and Inflation Impact:

West Texas Intermediate crude surged 5.4% to $74.26 per barrel, up from $67 last week. The spike has intensified inflation concerns and pushed Treasury yields higher. Chipmakers faced heavy selling pressure.

Federal Reserve Implications:

Rising oil prices have significantly altered rate cut expectations. Traders now see over 85% probability of at least one 25-basis point rate hike (not cut) from the Federal Reserve before year-end, according to CME's FedWatch tool. Minutes from the Fed's June monetary policy meeting are scheduled for release, though analysts question their usefulness given new Fed Chair Kevin Warsh's reluctance to provide forward guidance.

Geopolitical Risk:

Tensions centered on attacks on commercial ships in the Strait of Hormuz, a critical global oil transit route. Trump dismissed further negotiations, calling Iranian leadership "scum" and "sick people."

The situation presents significant risk-off sentiment for equity markets while benefiting energy sectors.