Oil Above $100 Lifts Energy Stocks as S&P 500 Futures Pause

Brent crude is trading near $106 a barrel as the war with Iran continues to disrupt global energy supplies, lifting energy stocks while S&P 500 futures sit near 7,817, up 0.1%. The index remains steady ahead of Tuesday, when bank earnings season begins.

The oil price surge is outpacing official forecasts. The U.S. Energy Information Administration (EIA) expected Brent to average $89 in the fourth quarter of May, but the commodity settled Friday at $105 and continues to rise. This gap means producers are realizing higher margins per barrel than planners anticipated.

Equity markets are reflecting this shift in supply constraints. Exxon Mobil is up 1.2% in premarket trading, while Chevron is up a similar amount. Both stocks have gained close to 45% this year. In the midstream sector, Energy Transfer agreed last week to buy Vaquero Midstream, a deal that expands a pipeline network already carrying natural gas to power plants serving AI data centers.

Conversely, rising bond yields are weighing on technology stocks. The 10-year Treasury yield rose to 5.2% on Friday, reaching its highest level since 2002. The Federal Reserve also raised its target rate in September, setting the upper bound at 4%. Higher rates reduce the present value of future profits, a dynamic that hits fast-growing tech stocks hardest.

NVIDIA is down 0.4% before the open. This movement is notable because NVIDIA accounts for 8% of the SPDR S&P 500 ETF, which is barely moving near $779. The flat index masks a rotation underneath: energy gains are offsetting losses in large tech holdings. While oil exposure is cushioning index fund results, it does not replace the reliance on AI giants and the infrastructure companies feeding them.

Market volatility remains low despite these macro pressures. The VIX is around 15, a normal reading that suggests options traders are calm even with bond yields at multi-decade highs and oil above $100.

The next catalyst is earnings. Four of the largest U.S. banks report before the open on October 13, along with two major health care companies. Investors will watch the money banks set aside for bad loans. The economy added only 29,000 jobs in September, so rising loan loss reserves would indicate that the hiring slowdown is beginning to affect borrower credit quality.