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Market Snapshot: Dow futures fall nearly 500 points as U.S. and allies weigh Russian oil import ban

U.S. stock futures stumbled Monday as the U.S. and its allies considered a Russian oil import ban, further squeezing commodity prices.

What’s happening
  • Futures on the Dow Jones Industrial Average
    YM00,
    -0.91%

    fell 456 points, or 1.4%, to 33126

  • Futures on the S&P 500
    ES00,
    -0.83%

    dropped 61 points, or 1.4%, to 4266

  • Futures on the Nasdaq 100
    NQ00,
    -0.92%

    fell 1.5%, or 212 points, to 13628

Last week, the Dow
DJIA,
-0.53%

and the S&P 500
SPX,
-0.79%

each fell 1.3%, and the tech-heavy Nasdaq Composite
COMP,
-1.66%

dropped 2.8%. Measured by the S&P GSCI
SPGSCI,
-1.22%

index, commodity prices surged by the most in more than 50 years.

What’s driving markets

Oil
CL.1,
+6.16%

futures surged as high as $130 per barrel as U.S. Secretary of State Anthony Blinken said the U.S. and allies were considering a ban on Russian oil imports as the invasion of Ukraine continued. Previously, sanctions on Russia excluded the energy sector, as the country provides about 45% of European Union gas imports, according to International Energy Agency data.

Massimo Bonisoli, an analyst at Italian broker Equita, said Russia’s production is difficult to replace. He pointed out that for several months the OPEC cartel has failed to increase volumes close to the new quotas announced monthly.

Grain prices also were surging, with wheat
W00,
+7.03%

futures jumping 7%.

“The galloping commodity prices will naturally put downward pressure on the economy and increase operational volatility for many companies already struggling with inflationary pressures,” said Peter Garnry, head of equity strategy at Saxo Bank.

Little progress was made in negotiations between Russia and Ukraine. Ukraine on Monday rejected an offer to open a humanitarian corridor to let civilians cross into Russia and Belarus.

Safe havens rallied, with gold futures
GC00,
+1.32%

trading above $2,000 an ounce.

Strategists at Citi cut their year-end S&P 500 target to 4,700 from 5,100. “We expect that a higher geopolitical risk premium will negatively impact broader market expected valuations,” said strategists led by Scott Chronert. “Implicitly, we see upside to US equities from here as the market narrative moves past the current perfect storm of headwinds, but to a level implying a flattish, to slightly down full-year return.”

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