Stock market today: Dow, S&P 500, Nasdaq futures fall as the US and Iran fail to agree to peace, US blockades Hormuz

US stock futures slid sharply Sunday evening after President Donald Trump said the US would move to block all maritime traffic through the Strait of Hormuz, following the collapse of weekend negotiations between Washington and Tehran.

Futures tied to the Dow Jones Industrial Average (YM=F) fell about 1.2%, pointing to a drop of more than 580 points at the open. Contracts on the S&P 500 (ES=F) and Nasdaq 100 (NQ=F) also declined 1.3% and 1.4% respectively.

Last week, optimism around a temporary ceasefire had driven a strong rally. The S&P 500 (^GSPC) posted a gain of about 3.6%, while the Nasdaq (^IXIC) rose nearly 4.7% and the Dow (^DJI) added 3%, marking their best weekly performances since November.

Bucking hopes for a cessation in hostilities following peace talks over the weekend, Tump announced in a post on Truth Social, that “Effective immediately, the United States Navy, the Finest in the World, will begin the process of BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz”.

The announcement followed failed talks in Islamabad, where US officials, including Vice President JD Vance, left without an agreement. Disputes reportedly extended beyond Iran to broader demands such as control over the strait, financial reparations, and a stop of Israeli attacks in Lebanon.

Markets reacted swiftly to the lack of resolution. US crude benchmark West Texas Intermediate (CL=F) surged more than 8% to above $104 per barrel while Brent (BZ=F) crude rose 7.5%, raising concerns about renewed inflationary pressure and potential drag on global growth.

Attention now turns to the start of first-quarter earnings season. Major US banks are set to report results, with Goldman Sachs (GS) kicking things off Monday, followed by Bank of America (BAC), Wells Fargo (WFC), Citigroup (C), JPMorgan Chase (JPM), and Morgan Stanley (MS) throughout in the week.