There’s a particular kind of tension that settles over Wall Street the night before a major inflation report, and Monday night was a textbook example. Dow futures were quietly sliding. S&P 500 futures were quietly climbing. Nasdaq-100 futures were doing something in between, gaining nicely but not enough to erase the day’s earlier losses. None of it made for a dramatic headline number — and that’s exactly the point. When futures split three different directions overnight, it usually means traders aren’t confident enough in either the bullish or bearish case to commit, and Monday night’s split had two very identifiable reasons behind it: a stalled diplomatic deal over one of the world’s most important oil chokepoints, and a Consumer Price Index report just 36 hours away that could reshape the entire interest-rate conversation.

Here’s the full picture of what happened, what’s driving it, and what to watch next.

The Overnight Numbers

At 10:30 PM EDT Monday, futures were pointing in three different directions:

That divergence followed a regular session that had already closed lower across the board. The Dow finished Monday down 0.11% at 53,975.98, the S&P 500 slipped 0.06% to 7,753.11, and the Nasdaq Composite fell a sharper 0.32% to 26,605.36 — a pullback that came directly on the heels of the best weekly performance for all three indexes since April, when the S&P 500 gained 3.58%, the Nasdaq surged 5.19%, and the Dow climbed 2.96% in a single week.

In other words: markets aren’t in a downtrend. They’re pausing to digest a huge run higher, right as two separate, genuinely uncertain catalysts converge on the same 48-hour window.

Catalyst One: The Strait of Hormuz Standoff Isn’t Resolved Yet

The biggest overnight driver wasn’t an economic data point at all — it was geopolitics. For months, markets have been watching for a diplomatic resolution that would reopen the Strait of Hormuz, the narrow waterway through which a massive share of the world’s seaborne oil normally passes. Iran said Monday that talks with Oman over managing the strait are ongoing, but explicitly said that agreement alone wouldn’t be enough to reopen the waterway unless the United States meets a specific list of conditions.

That’s a meaningfully different message than the “very close” framing that had circulated just a day earlier, and it’s the kind of ambiguity that markets tend to punish with caution rather than panic — hence “mixed,” not “sharply lower.”

Adding another layer to the story, President Trump said Monday that he intends to seek compensation from Iran as part of any eventual peace agreement, tying the demand to both military conflict damages and the treatment of Iranian protesters over the past several decades, and directing his negotiating team to formally raise the issue in future talks. It’s the kind of statement that virtually guarantees the negotiating timeline gets longer, not shorter — and markets read prolonged uncertainty over a major oil chokepoint as a reason to keep some risk on the sidelines.

The real-world impact of the standoff is already visible in tanker traffic data. Economist Steve Hanke highlighted the scale of the disruption bluntly, noting that essentially 53 tankers crossed the Strait of Hormuz on August 9 last year, compared with just 3 tankers this year — a statistic that captures just how effectively the waterway has been choked off during the standoff, regardless of how the diplomatic language is framed.

The Oil Price Connection

That uncertainty is showing up directly in energy markets, and energy markets are showing up directly in the inflation conversation:

Oil prices climbing into a major inflation print is never a coincidence traders ignore. Energy costs feed directly into both the headline CPI number and, with a lag, into core inflation through transportation and production costs — meaning tonight’s oil move isn’t just an energy-sector story, it’s a preview of upside risk to Wednesday’s number.

Catalyst Two: This Week’s Inflation Data Is the Real Main Event

If the Hormuz situation is the overnight noise, the July Consumer Price Index report due Wednesday morning is the signal everyone is actually positioning around. A Producer Price Index report follows on Thursday, giving markets back-to-back inflation readings in the same week — a rare and consequential data cluster.

Here’s what Wall Street is currently modeling heading into Wednesday’s release, based on FactSet consensus estimates:

That range on the core monthly figure matters more than it might look. Bank of America is modeling core CPI up 0.20% for the month, while Wells Fargo’s estimate runs hotter at 0.24%, reflecting different assumptions about whether tariff-related cost pass-through and Apple’s recent pricing increases on consumer electronics show up fully in July’s data or get spread out over subsequent months. Wells Fargo has also flagged that core services inflation is expected to reaccelerate from June’s unusually soft levels — a detail worth watching, since a single soft month followed by a rebound is a very different story for the Fed than genuine sustained progress on inflation.

Why the Fed’s Reaction Function Has Flipped

Here’s what makes this week’s data unusually high-stakes: heading into Friday’s jobs report, futures traders had actually been pricing in a quarter-point interest rate hike at the September Federal Reserve meeting — not a cut. That’s a dramatic shift from the rate-cut expectations that dominated markets earlier in the year, and it’s a direct consequence of inflation proving stickier than policymakers had hoped for much of 2026.

Friday’s weak jobs report took some of the pressure off, giving the Fed more room to hold steady rather than tighten further. But CME Group’s FedWatch tool was still showing essentially 50-50 odds between a rate hike and no change heading into this week — meaning Wednesday’s CPI print, and Thursday’s PPI reading right behind it, are genuinely capable of tipping that balance in either direction.

Brent Schutte, Chief Investment Officer at Northwestern Mutual Wealth Management Company, offered a useful framing for how the Fed is likely to weigh the coming data: the central bank has consistently prioritized labor-market weakness over persistent inflation in its recent decisions, which suggests policymakers may lean toward caution on any rate hike even if inflation stays elevated, given how soft the last two employment reports have been.

Prediction markets, for what it’s worth, are leaning toward a tamer outcome than the official Wall Street consensus. Kalshi traders were assigning less than 55% odds that headline CPI comes in above 3.3% year-over-year — below the Dow Jones consensus forecast of 3.4% — and just an 11% probability that core inflation exceeds 2.5%. That’s a meaningfully more optimistic read than the economist surveys, and if prediction markets prove right, Wednesday could bring the kind of “cooler than feared” surprise that tends to fuel a relief rally rather than a selloff.

Stocks Making Overnight Moves

Even with the macro story dominating, several individual names were drawing outsized attention in overnight trading:

• Riot Platforms (RIOT) surged more than 24% overnight after reports surfaced that the Bitcoin miner has signed a deal to supply $9.1 billion worth of compute capacity to Anthropic — a headline that instantly reframes Riot’s story from crypto-mining pure play to AI infrastructure supplier.
• Rocket Lab USA (RKLB) snapped a seven-day rally after posting Q2 results that told a genuinely mixed story: revenue of $234.07 million came in up 62% year-over-year and above consensus, but the company’s loss of $0.08 per share was wider than Wall Street had modeled.
• Hims & Hers Health (HIMS) slid nearly 6% overnight despite posting better-than-expected Q2 revenue and adjusted EBITDA, and despite adding roughly 300,000 new subscribers during the quarter — the disconnect came from declining margins and an $86 million net loss tied to acquisition, restructuring, and legal costs.
• Fermi LLC (FRMI) jumped nearly 21% higher overnight after announcing its first binding customer lease at the Project Matador campus in Texas, giving the young company a concrete revenue anchor for the first time.

Other Market Signals Worth Watching

Beyond equities, several cross-asset signals reinforce the “cautious, not panicked” read on Monday night’s positioning:

• Treasury yields: The 10-year yield sat at 4.705%, elevated enough to reflect genuine inflation-hedging demand without spiking into outright alarm territory.
• Gold: Spot prices climbed to $4,420.44 an ounce, continuing a strong run that reflects some combination of geopolitical hedging and inflation-protection buying.
• Index ETFs: The SPDR S&P 500 ETF (SPY) and Invesco QQQ Trust (QQQ) both edged higher overnight. While the SPDR Dow Jones Industrial Average ETF (DIA) slipped marginally. Mirroring the underlying futures split almost exactly.
• Long-duration bonds: The iShares 20+ Year Treasury Bond ETF (TLT) was down 0.12% on neutral sentiment, consistent with a market that isn’t yet convinced rate cuts are coming.
• Asian markets: Trading was similarly split into Tuesday’s session, with South Korea’s KOSPI and Japan’s Nikkei 225 both higher. While China’s SSE Composite edged lower at the open and Australian stocks climbed. A global mirror of Wall Street’s own indecision.

What’s Next: A Loaded Earnings and Data Calendar

This week’s calendar doesn’t let up after Wednesday’s CPI print. Super Micro Computer (SMCI), CoreWeave (CRWV), and POET Technologies (POET) are all scheduled to report earnings Tuesday. With Infleqtion (INFQ) and Nebius Group (NBIS) following later in the week — a dense cluster of AI-infrastructure-adjacent names that could add their own volatility on top of the macro data.

Put together, the setup heading into Wednesday is genuinely two-sided in a way that’s rare even for a normal pre-CPI session. A geopolitical wildcard that could push oil and inflation higher without warning. A data release where professional forecasters and prediction markets meaningfully disagree. And a Federal Reserve that has left itself real room to go either way in September. That’s precisely why Monday night’s futures couldn’t commit to a single direction. And it’s worth watching whether Tuesday’s session brings any more clarity before the real test arrives Wednesday morning.

Follow TNN for daily stock market news and financial news today.

Disclaimer: This publication is entirely for informational and journalistic purposes and does not constitute formal financial, investment, or legal advice. All market investments carry inherent risks of capital loss. Always complete independent due diligence prior to executing equity trades.

About The Author

Nichole Miller

See author's posts