Oil Surge Keeps US Stock Futures Mixed Ahead of Bank Earnings

Rising oil prices and geopolitical tensions kept US stock futures subdued on Monday, October 12, as investors assessed the outlook for inflation and interest rates ahead of major bank earnings and economic reports due later this week. Brent crude climbed above $106 a barrel after deadly weekend strikes on Riyadh's international airport, while uncertainty over diplomatic efforts added to market concerns.

Brent crude futures reached their highest level in about two weeks, according to the market data cited by Reuters. Prices eased from their gains after President Donald Trump said Ukraine and Russia had agreed to stop attacks on each other's energy facilities following a US diesel-supply deal with Moscow. Details of the agreement remained unclear, and the proposal faced opposition in Washington.

Chris Beauchamp, chief market analyst at IG, said developments in the Middle East had offset potential relief from the US diplomatic initiative.

"Any hope that Trump's deal with Putin might help bring down prices has been negated by the flare-up in the Houthi conflict," said Chris Beauchamp, chief market analyst at IG.

Beauchamp said energy market developments could continue to influence investor sentiment even as companies begin reporting quarterly results.

"While earnings season will be a key driver this week, investors should expect oil news to keep making headlines, weighing heavily on sentiment," Beauchamp said.

Major US banks, including Wells Fargo, Goldman Sachs, Citigroup, and JPMorgan Chase, are scheduled to begin reporting third-quarter earnings on Tuesday. According to LSEG IBES data, earnings for S&P 500 companies are expected to increase 30.6% in the third quarter.

At 7:12 a.m. ET on Monday, Dow E-minis gained 30 points, or 0.06%, while S&P 500 E-minis rose 2.25 points, or 0.03%. Nasdaq 100 E-minis fell 73 points, or 0.23%.

The three major US stock indexes finished higher last week as investors anticipated strong earnings from companies benefiting from artificial intelligence and hoped the Federal Reserve would avoid near-term interest rate increases.

Angelo Kourkafas, senior global strategist for investment strategy at Edward Jones, said a relatively small group of large technology companies linked to artificial intelligence had contributed an outsized share of market returns and value during the four-year bull market.

"While correction risks are rising as the cycle matures, growing profits and a Fed that may be looking to tap the brakes rather than slam on them suggest the bull market may still have room to run," Kourkafas said.

Recent economic data showing a smaller-than-expected increase in inflation and weaker job growth have also reduced expectations for an imminent rate increase. However, elevated energy prices pushed Treasury yields to 24-year highs earlier this month, raising concerns that persistent inflation could keep monetary policy restrictive and pressure stock valuations.

The US Treasury market was closed Monday for Columbus Day. Investors were also preparing for US consumer price index data, producer price figures, and retail sales reports scheduled for later in the week. Higher energy costs were expected to push annual headline consumer inflation to 3.7%, while core inflation was forecast to rise 2.5% annually.

Market pricing indicated a 19% probability that the Federal Reserve would raise interest rates this month, according to CME's FedWatch tool.

In premarket trading, IREN shares rose 3.3% after The Information reported that Anthropic had entered into a multiyear cloud agreement with the data center company. Salesforce shares gained 4.2% after BofA Global Research upgraded its rating to buy from underperform.