S&P 500 Futures Fall 1.1% as Tech Weakness, Iran Strikes Weigh

S&P 500 Index futures fell 1.1% as of 7:45 a.m. in New York, extending a selloff driven by persistent weakness in technology stocks and heightened geopolitical tensions after the US and Iran exchanged strikes overnight. The decline in futures points to a lower open for US equities, with the tech-heavy Nasdaq likely to face the most pressure. The technology sector has been underperforming recently amid concerns over elevated valuations and rising interest rates, which compress future earnings expectations. The geopolitical shock adds another layer of uncertainty, prompting traders to reduce risk exposure. Investors can track the evolving price action on NowPrice's live stocks dashboard to monitor sector-level moves in real time.

This selloff reflects a broader market recalibration as the Fed model—comparing the S&P 500 earnings yield (currently around 3.5%) to the 10-year Treasury yield (near 4.2%)—suggests equities are less attractive relative to bonds. The forward P/E for the S&P 500 has compressed to roughly 19x, still above the 10-year average of 17x, leaving room for further multiple contraction if rates stay elevated. Breadth indicators have weakened, with fewer than 40% of stocks trading above their 50-day moving average, signaling a narrowing rally. Sector rotation is underway, with defensive sectors like utilities and healthcare gaining relative to tech, while buyback yields—a key support for equities—have dipped as companies pause repurchases amid uncertainty. Options-implied volatility, as measured by the VIX, has spiked above 22, reflecting heightened hedging demand.

Looking ahead, market participants will focus on any diplomatic developments between the US and Iran, as well as upcoming economic data releases, including the Consumer Price Index later this week. A further escalation could push the S&P 500 toward key support levels around 5,100, while a de-escalation might trigger a relief rally. Traders should also watch for any Fed commentary that could influence rate expectations, particularly if the CPI data surprises to the upside, potentially reinforcing the higher-for-longer rate narrative and putting additional pressure on equity valuations.