US Stock Market Sees Tepid Start Amid Middle East Tensions and Rising Oil and Bond Yields

US Stock Markets Eye Weak Start Amid Rising Tensions with Iran

US stock markets are expected to start Thursday's trades on a weak note as fresh tensions between the US and Iran weigh on investor sentiment and dampen hopes of a near-term peace agreement. The escalation of geopolitical concerns comes after President Donald Trump dismissed reports suggesting that the US was close to reaching a compromise with Iran.

The development has had a ripple effect on the markets, with oil prices rising more than 2%. This surge in oil prices is also fueling concerns that energy prices could fuel inflation. Meanwhile, US Treasury yields have also moved higher, further exacerbating the market's volatility.

As of 4:54 a.m. ET, the market outlook is bearish, with Dow futures down 53 points, or 0.1%, while S&P 500 futures slipped 0.09% and Nasdaq 100 futures declined 0.21%. The market's focus is now on key inflation data later in the day, which could influence expectations around interest rates.

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Investors are eagerly awaiting the release of the personal consumption expenditures (PCE) report, which includes the Federal Reserve's preferred inflation gauge. The data will be closely monitored for clues on the future path of monetary policy under new Fed Chair Kevin Warsh. At present, traders expect the Fed to keep interest rates unchanged for most of the year, though some are pricing in the possibility of a 25-basis-point rate hike in December.