Dow futures fall 100 points after Hamas attack against Israel

Stock futures were lower on Sunday as the attack on Israel by Palestinian militants adds geopolitical risk to an already fragile market dealing with inflation and surging interest rates.

Futures tied to the Dow Jones Industrial Average fell 189 points, or 0.5%. S&P 500 futures fell 0.7%, while Nasdaq 100 futures slipped 0.6%.

The Israeli-Palestinian conflict escalated to full-blown war on Saturday after the militant group Hamas staged an invasion, to which Israel was seemingly caught off guard. Israeli Prime Minister Benjamin Netanyahu asserted that Hamas “will pay a price it has never known before.”

WTI crude oil futures were up by 2% in early trading Sunday.

The rising geopolitical tensions could have ramifications for the energy market, with some experts forecasting a “knee jerk surge” in oil. The rising tension could also serve to stoke further volatility in market that has kept traders worried with persistent inflation and higher interest rates.

Oil prices meaningfully pulled back below $90 per barrel last week, with Brent crude slipping roughly 11% and  U.S. West Texas Intermediate notching an 8% drop. While neither Israel nor Palestine are major players in the global energy picture, both nations are located in a key region for oil that could have broader implications. OPEC+, the oil cartel that includes non-OPEC member Russia, will remain cautious on any moves to expand oil output further and change plans for cuts, the Saudi Arabia’s energy minister Prince Abdulaziz bin Salman told CNBC on Sunday.

With the bond market closed on Monday for Columbus Day, Wall Street will have to wait until Tuesday for an update on interest rates.

All three major indexes finished last week higher despite a stronger-than-expected jobs report that initially pushed up Treasury yields and sent stocks lower. A hotter-than-expected jobs report from Friday showed hiring remains robust, with the economy adding 336,000 jobs last month. Wages, meanwhile, grew at a largely muted clip, which gave investors hope inflation was cooling.

Bond yields eased somewhat as stocks climbed Friday, but the10-year Treasury yield reached a 16-year high earlier in the week.