Why are US stock futures falling today? Dow, S&P 500 and Nasdaq slip as oil fuels inflation fears

Dow Jones futures fell 0.9% in premarket trading. Futures linked to the S&P 500 dropped 0.5%, while Nasdaq-100 futures fell 0.7%, according to Yahoo Finance.

The fall came after US stocks slipped from record highs on Wednesday. Investors are now watching whether the market can recover or whether higher inflation and borrowing costs will put more pressure on stocks.

The Strait of Hormuz is especially important for global energy markets. Before the war, shipments equal to about 20% of global oil and fuel supplies moved through the waterway, according to Reuters.

Shipping attacks in the region have increased in October. Reuters reported that attacks on tankers passing through the Strait of Hormuz reached their highest level last week for any week since the Iran war began.

Also read: Why are oil prices surging above $104? Hormuz attacks and Hurricane Isaias raise supply fears

The attacks are creating more risks and higher costs for oil shipments. More crude oil is now moving out of the Gulf, but the shipments are facing greater risks to both cargo and crew, Reuters reported.

The inflation concern is also important for the Federal Reserve. At its September meeting, Fed officials unanimously voted to raise interest rates, with persistent inflation among the reasons for the decision, according to Yahoo Finance.

Inflation is still a major issue for the Fed even though some recent economic data have changed the outlook. Investors are watching closely for clues about what the central bank could do with interest rates next.

High Treasury yields can make stocks less attractive to investors. They also mean higher borrowing costs across the economy, which can put pressure on companies and households.

The bond market is also going through a major sell-off. Yahoo Finance reported that the global bond rout continued on Thursday, with Treasury yields staying close to multidecade highs.

PepsiCo was one of the first major companies to report its results. The company beat Wall Street’s expectations for the third quarter but cut its profit outlook as it works to improve its business in North America, Yahoo Finance’s Brooke DiPalma reported. PepsiCo’s revenue increased 5.6% from a year earlier to $25.27 billion. That was slightly above Wall Street’s expectation of about $25 billion.

PepsiCo also reported adjusted earnings of $2.34 per share. That was higher than the $2.29 per share expected by analysts, according to Bloomberg consensus data. PepsiCo received $178 million in tariff refunds during the third quarter. The refunds added to the company’s financial results for the period.

PepsiCo still expects its fiscal 2026 revenue to be at the high end of its previous range. The company expects net revenue to increase by about 6%. PepsiCo CEO Ramon Laguarta said the company is working with urgency to improve its financial and market performance. He especially pointed to the company’s North American business, Yahoo Finance reported.

The wider earnings picture is still positive. FactSet estimates that S&P 500 companies could report 29.5% earnings growth in the third quarter. If that estimate is correct, it would mark the third straight quarter of more than 25% earnings growth for S&P 500 companies. This strong earnings outlook is one reason investors are still hopeful about US stocks.

But strong earnings are now competing with worries about inflation and interest rates. This is creating a tug-of-war in the stock market, with investors weighing better company profits against higher costs and tighter financial conditions.

The labor market is already being affected by a decline in workforce participation among older Americans. Yahoo Finance’s Hamza Shaban reported that the share of Americans working or looking for work has not fully recovered from the pandemic shock.

People aged 55 and above have been the biggest reason for the decline in overall labor force participation, according to Bank of America economists. The finding suggests that more older workers leaving the workforce is affecting the US economy.

Bank of America economist Aditya Bhave said the finding challenges a common negative view of the labor market. He argued that the data do not support the idea that unemployment would simply have been much higher if labor force participation had not fallen.

The strong stock market has also helped some older Americans leave work earlier. According to Bank of America, the post-pandemic rise in stock prices has given some older Americans enough wealth to reduce or end their participation in the workforce.

Also read: Mortgage rates are rising, but these 13 states saw rates fall — is yours one of them?

This trend is linked to the FIRE idea — Financial Independence, Retire Early. Some people aim to build enough savings and investments to stop working earlier than the traditional retirement age.

The comments come after Elon Musk’s SpaceX entered public markets. SpaceX went public in June and raised $75 billion in its IPO. Other major private companies are also being watched for possible IPOs. AI companies Anthropic and OpenAI are among the names that have attracted attention from investors.

However, market uncertainty has already pushed some companies to delay their IPO plans. Smart-ring maker Oura is one example of a company that postponed its public debut, according to Yahoo Finance.

Blue Origin recently raised $10 billion from outside investors. The funding round valued the space company at about $140 billion, according to the Wall Street Journal.

Bezos personally put $2 billion into that funding round. The large investment highlights the scale of Blue Origin’s current valuation and ambitions, Yahoo Finance reported.

At the same time, strong corporate earnings are giving investors a reason to stay optimistic. The market is therefore balancing positive earnings expectations against concerns over oil, inflation, interest rates and bond yields.

The next major market signals will come from Thursday’s economic data and Fed commentary. Jobless claims, Chris Waller’s comments and movements in oil and Treasury yields could all influence the Dow, S&P 500 and Nasdaq during the trading day.