Dow futures slide 150 points as oil rises following U.S. bombing of Iran: Live updates

Stock futures fell ahead of Monday's session after the United States entered Israel's war against Iran over the weekend by striking three nuclear sites, a move by President Donald Trump that raised oil prices and risked a bigger conflict in the Middle East.

Futures tied to the Dow Jones Industrial Average fell by 170 points, or 0.4%. S&P 500 futures shed 0.4% and Nasdaq 100 futures lost 0.6%.

The U.S. launched attacks Saturday at Iranian sites in Fordo, Isfahan and Natanz, surprising investors who were expecting more diplomacy to possibly take place after Trump said on Friday that he would make a decision to attack Iran “within the next two weeks,” according to the White House.

Oil prices have already spiked in recent weeks following the increased tensions in the Middle East. On Sunday night, U.S. crude oil futures rose another 3.8% to nearly $77 a barrel.

“When you have conflict, you have an overreaction — a knee jerk reaction — which tends to be an exaggeration, that can last up to two to three weeks,” said Jay Woods, chief global strategist at Freedom Capital Markets. “With Ukraine, the S&P 500 sold off 6% and oil spiked dramatically.”

Trump said in a Saturday evening speech from the White House after the attacks, that “there will be either peace, or there will be tragedy for Iran far greater than we have witnessed over the last eight days.”

Now traders braced for Iran's retaliation. The country could target U.S. personnel in nearby bases or close the Strait of Hormuz, which would majorly disrupt global oil flows. A prolonged blocking of the strait could boost oil prices above $100 per barrel. In a Sunday interview, with Fox News, U.S. Secretary of State Marco Rubio called for the Chinese government to step in and prevent Iran from closing the key trade route. China remains Iran's most important oil customer.

“Now with the U.S. fully engaged in the conflict, the baseline for oil prices has shifted to the mid $80s range per barrel entering stage two from one-side regional conflict to U.S. managed conflict,” said Ahmad Assiri of Pepperstone. “Even if Iran doesn't physically close the strait or attack oil tanks, the mere increase in probability from about 5% to around 15% will itself create a premium in crude prices.”

The S&P 500 lost 0.15% last week for its second negative week in a row. Despite this soft patch, the benchmark closed Friday about 3% from a record. The spike in oil prices and a greater war in the Middle East adds another threat to the stock market and the economy, already dealing with a rushed remaking of global trade by Trump this year.

Gulf markets end higher despite turmoil in wake of U.S. strikes on Iran

Markets across the Middle East ended mostly higher on Sunday after the United States entered the war between Israel and Iran.

Stocks in Tel Aviv reached an all-time high on bets Washington's entrance into the conflict with Tehran would help it to come to an end. The broader TA-125 index was 1.77% higher, while the TA-35, Tel Aviv's blue-chip index, was up 1.5%.

Egypt's benchmark EGX30 was the region's major gainer, up 2.7%.

“The Gulf has distanced itself and has been calling for appeasement, supporting a peaceful resolution, and has gone as far as condemning Israeli aggression,” Fadi Arbid, founding partner and CIO of Amwal Capital Partners, told CNBC. He explained that such rhetoric “has helped the Gulf isolate itself from conflict” and any significant short-term market impact, adding that the net mid-term is positive.

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Stock futures tumble on Sunday night

Stock futures tumbled shortly after 6 p.m. ET on Sunday night.

Dow futures shed 309 points, or 0.7%. S&P 500 futures fell 0.8%, while Nasdaq 100 futures lost 1%.