US Stock Market Sees 1% Decline in Futures Following Trump Warning on Strait of Hormuz Blockade

US Stock Futures Indicate Gap-Down Start to Monday's Session

US stock futures are signaling a gap-down start to Monday's session on April 13, as oil prices have resumed their climb after the US military prepared to block traffic to and from Iranian ports and the Strait of Hormuz, where most shipping has been stalled by Iran since the start of the war. Futures of the three key indices—the Dow Jones Industrial Average, the S&P 500, and the Nasdaq—were down in the range of 0.5%–1%.

The main US stock indexes logged their second consecutive week of gains on Friday on hopes that the peace talks in Pakistan would bear fruit. However, the peace deal between the US and Iran collapsed as both countries failed to reach a consensus. US President Donald Trump stated that direct talks with Iran in Pakistan failed because Iran was “unwilling to give up its nuclear ambitions,” while an Iranian foreign ministry spokesperson reportedly blamed the US for excessive demands and unlawful requests.

Trump on Sunday warned that the US would start “blockading any ships trying to enter or leave the Strait of Hormuz.” “I have also instructed our Navy to seek and interdict every vessel in international waters that has paid a toll to Iran. No one who pays an illegal toll will have safe passage on the high seas,” he wrote on social media. The US Central Command (Centcom) later said its forces would begin implementing the blockade at 10:00 EDT (14:00 GMT) on Monday.

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US stocks, which had recovered most of their recent losses in April amid hopes of easing tensions, are likely to witness volatility going ahead as Iranian officials have also threatened retaliation, indicating that tensions in the region could escalate again.

Inflation Climbs to 3.3%

On the economic front, the latest US CPI report—the first since the conflict began—showed inflation climbing to 3.3%, the highest since May 2024, with the monthly index rising 0.9%, the steepest increase since mid-2022. Traders are now pricing in a 30% chance of at least a 25-basis-point rate cut in December, according to CME Group's FedWatch tool.

Earnings Season Unfolds

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The first-quarter earnings season unofficially kicks off this week. The nation’s largest banks will lead the reporting cycle, with Goldman Sachs slated to release results on Monday. Citigroup, Wells Fargo, JPMorgan Chase, Morgan Stanley, and Bank of America are all scheduled to report later this week.

Oil Prices Continue to Rise

Oil prices have been rising as shipping through the strait has effectively stalled since late February. Brent crude oil, the international benchmark, has climbed from roughly $70 per barrel before the war in late February to more than $119 at times. On Monday, benchmark US crude jumped $9.43, or 10%, to $103.69 a barrel. Brent crude, the international benchmark, rose $7.04, or 7.4%, to $102.24 a barrel.

Trump is looking to cut off a significant source of revenue for the Iranian government through the closure of the strait, but it could also risk pushing oil and gas prices even higher. Analysts have suggested that the US president's statement was aimed at increasing pressure on Iran to strike a deal on American terms.