U.S. stock index futures moved slightly lower on Thursday as investors evaluated the growing economic and geopolitical impact of the escalating conflict in the Middle East. The decline followed a modest rebound in the previous trading session, when markets briefly recovered after recent volatility.
Tensions intensified after Iran launched a new wave of missiles toward Israel, only hours after diplomatic efforts in Washington to stop the ongoing U.S. air campaign stalled.
As uncertainty increased, traditional safe-haven assets continued to attract demand. Gold prices and the U.S. dollar moved higher, while U.S. Treasury bonds cooled. As a result, the 10-year Treasury yield climbed to its highest level since early February.
Oil rally adds to inflation concerns
Oil prices remained one of the most sensitive assets to the geopolitical developments. Crude oil surged more than 3% during the session and has risen over 15% so far this week, extending its rally as the conflict entered its sixth day.
The sharp rise in energy prices has renewed fears that higher fuel costs could increase inflation pressures and complicate the outlook for the U.S. Federal Reserve and its future interest rate policy.
At 02:40 a.m. ET, U.S. stock futures indicated a cautious start for Wall Street:
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Dow Jones E-mini futures fell 185 points (0.38%)
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S&P 500 E-mini futures declined 14 points (0.2%)
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Nasdaq 100 E-mini futures dropped 62.75 points (0.25%)
Tech stocks continue to attract buyers
Despite growing geopolitical risks and concerns about inflation, investors have continued to rotate back into technology stocks. Bargain hunters have been buying major tech companies after the sector experienced heavy selling pressure earlier in the month.
The Nasdaq Composite has gained about 0.6% this week, supported by renewed interest in technology shares. Meanwhile, the S&P 500 remained slightly lower overall.
During Wednesday’s trading session, technology stocks again led the market recovery. The Nasdaq rose 1.29%, the S&P 500 gained 0.8%, and the Dow Jones Industrial Average closed 0.5% higher.
Investor sentiment was partly supported by reports suggesting Iran may be open to diplomatic talks, as well as comments from U.S. President Donald Trump, who pledged to ensure stability in global oil markets.
Key economic data and Fed signals ahead
Markets also received support from recent data indicating that U.S. economic activity remains relatively resilient, while government officials downplayed the inflationary impact of rising oil prices.
Looking ahead, investors will focus on weekly U.S. jobless claims data, which is scheduled for release later Thursday. Attention will then shift to the U.S. nonfarm payrolls report on Friday, a key indicator of labor market strength.
Market participants will also monitor additional signals from the Federal Reserve, especially following a series of hawkish comments from policymakers. Federal Reserve Vice Chair Michelle Bowman is expected to deliver remarks later in the day, which could provide further clues about the central bank’s interest rate outlook.
