Key Takeaways
- Fresh US military action against Iran near the Strait of Hormuz sparked market concerns Thursday
- Futures for the Dow, S&P 500, and Nasdaq all traded lower during pre-market hours
- Crude oil rallied almost 3%, pushing Brent to $94.86 per barrel
- Snowflake shares skyrocketed more than 30% following earnings beat and $6 billion Amazon Web Services partnership
- Investors await Thursday’s PCE inflation report, the Federal Reserve’s preferred price gauge
Equity futures retreated Thursday morning following renewed US military operations against Iran in the vicinity of the Strait of Hormuz, intensifying concerns about the delicate détente between Washington and Tehran.
Dow Jones Industrial Average futures slipped 0.2%. Futures contracts for the S&P 500 declined 0.4%, while Nasdaq 100 futures fell 0.8%.
Overnight Developments
American military forces intercepted Iranian unmanned aerial vehicles and targeted a drone command facility near Bandar Abbas late Wednesday evening, the Wall Street Journal reported. Pentagon officials characterized the operations as defensive measures rather than an expansion of hostilities.
All three benchmark indices reached record closing levels Wednesday before these developments unfolded. Those advances occurred even as momentum in semiconductor stocks showed signs of cooling.
Matt Britzman, an analyst at Hargreaves Lansdown, noted that financial markets had already factored in expectations that the conflict would remain limited. “Optimistic news now carries less weight in boosting investor confidence, whereas negative developments can rapidly dampen enthusiasm,” he observed.
Britzman further emphasized that the resurgence of tensions and questions surrounding maritime traffic and Iran’s nuclear ambitions have reintroduced caution into trading activity.
Government bond yields and the US dollar both strengthened modestly. The benchmark 10-year Treasury yield increased 2 basis points to reach 4.51%. The greenback appreciated 0.1% versus a basket of major currencies.
Energy Markets and Corporate Results
Oil prices advanced significantly on worries about potential interruptions to tanker traffic through the Strait of Hormuz. Brent crude jumped 2.8% to reach $94.86 per barrel. West Texas Intermediate increased 2.8% to $91.20 per barrel.
Regarding corporate earnings, Snowflake delivered impressive quarterly results Wednesday evening and unveiled a $6 billion strategic agreement with Amazon Web Services. The company’s shares surged more than 30% in extended trading.
Marvell and HP similarly reported robust quarterly performances, with both corporations highlighting artificial intelligence as a catalyst for increased expenditure on semiconductors, cloud infrastructure, and computing equipment.
Salesforce exceeded analyst projections but issued conservative guidance. This development heightened investor worries about AI-driven disruption across the enterprise software sector.
Thursday’s calendar includes additional earnings releases from Costco Wholesale, Dell Technologies, Dollar Tree, Best Buy, and The Gap.
The Personal Consumption Expenditures index, which represents the Federal Reserve’s favored inflation indicator, will be published Thursday. This data will reveal whether inflationary pressures are intensifying sufficiently to potentially prompt the Fed toward interest rate increases.
Investors generally maintain optimism that Washington and Tehran will ultimately achieve a diplomatic resolution. However, market strategists suggest the recent escalation provides justification for profit-taking following the robust AI-fueled rally witnessed in recent weeks.
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