S&P 500 Futures Drop 1% as Trump Threatens Iran, CPI Looms

President Donald Trump threatened fresh strikes against Iran's infrastructure Tuesday, saying negotiations had taken too long and Tehran must "pay the price." The escalation comes hours before the US consumer price index release, compounding a risk-off shift that already had traders on edge.

S&P 500 futures dropped 1% in European afternoon trading. Nasdaq 100 futures fell 1.5%, extending the week's tech selloff. The moves reflect a market bracing for a hot CPI print that could reinforce the Federal Reserve's hold on rates, traders said.

WTI crude rose 1.5% to $89.50 a barrel, supported by the geopolitical premium. The dollar held steadier across the board, with the aussie slipping on the defensive mood. For more on how crude moves feed into currency markets, see WTI Breaks $88, Brent Tests $90: The FX Transmission Path. Ten-year Treasury yields edged up 1.4 basis points to 4.54%.

Gold extended its slide, falling 2.3% to $4,165 an ounce as real yields rose and the dollar held firm. The threat of new strikes follows weeks of on-again, off-again negotiations. Trump's statement that "enough is enough" caught some traders off guard, though the broader market had already been positioning for a hawkish CPI outcome.

The CPI report is due at 8:30 a.m. ET. A hot print would reinforce the case for rates to stay higher for longer, traders said.