U.S. stock index futures declined on Thursday as oil prices surged back above $100 per barrel, increasing concerns about inflation and prompting traders to scale back expectations for near-term interest rate cuts. Rising energy costs have intensified uncertainty across global financial markets and added pressure to equity futures.
The jump in crude oil prices followed reports that two tankers were set on fire in Iraqi waters after suspected Iranian strikes. The attacks were part of a broader wave of incidents targeting oil and transportation infrastructure across the Middle East. Iranian officials warned that crude prices could potentially climb as high as $200 per barrel if tensions continue to escalate.
Oil surge raises inflation concerns and rate outlook
Higher oil prices have renewed fears that inflation could remain elevated for longer than previously expected. As a result, investors are reassessing the outlook for monetary policy by the Federal Reserve.
Analysts at Goldman Sachs have delayed their forecast for the Fed’s next interest rate cut to September, compared with an earlier expectation of June. Money market futures now indicate that traders expect only one quarter-point rate cut by the end of the year, down from earlier projections of two cuts before geopolitical tensions escalated.
Global financial markets have been shaken in recent weeks as the conflict involving the United States, Israel, and Iran disrupted oil supply routes and pushed energy prices sharply higher. The surge in oil prices has complicated plans by central banks to begin easing monetary policy.
Trade tensions and private credit concerns weigh on sentiment
Investor sentiment was also affected by new trade actions announced in Washington. The U.S. government said it would launch two investigations into excess industrial capacity among 16 major trading partners, as well as into forced labor practices.
The move follows a decision by the U.S. Supreme Court last month that struck down key elements of tariff policies introduced under Donald Trump.
At 3:35 a.m. ET, S&P 500 futures were down 47.5 points, or 0.7%. Dow Jones Industrial Average futures declined by 387 points, or 0.82%, while Nasdaq‑100 futures fell 171.25 points, or 0.69%.
At the same time, investors are paying closer attention to risks within the roughly $2 trillion private credit market after several recent credit issues raised concerns about borrower stability and loan performance under higher interest rates.
Glendon Capital Management suggested that some private credit lenders, including Blue Owl Capital, may be masking weaknesses in their portfolios, according to a report by the Financial Times.
Meanwhile, Morgan Stanley restricted redemptions in one of its private credit funds on Wednesday, while JPMorgan Chase reduced the valuation of certain loans tied to private credit investments.
Earnings and economic data in focus
Shares of Bumble are expected to attract attention after the dating app company reported fourth-quarter revenue that exceeded analyst expectations. The company’s stock jumped roughly 20% in after-hours trading on Wednesday.
Later in the day, investors will monitor weekly U.S. jobless claims data and comments from Michelle Bowman, Vice Chair for Supervision at the Federal Reserve, for further insight into the outlook for the U.S. economy and monetary policy.
