U.S. stock futures indicate a weaker start to trading on Thursday, pointing to additional losses after equities faced heavy selling pressure in the previous session.
Investor sentiment is being dampened by concerns about the escalating conflict in the Middle East following attacks on key energy infrastructure throughout the region.
Israel launched strikes on Iran’s South Pars natural gas fields and oil facilities in Asaluyeh, while an Iranian missile strike targeting Qatar’s Ras Laffan energy complex reportedly caused “extensive damage,” according to the country’s state-run energy company.
In a post on Truth Social, President Donald Trump warned that the United States could “massively blow up the entirety of the South Pars Gas Field at an amount of strength and power that Iran has never seen or witnessed before” if additional attacks are carried out against Qatar.
Brent crude futures, which surged to nearly $120 per barrel after the latest developments, have since retreated slightly but remain above $113 per barrel.
Stocks fell sharply during Wednesday’s trading session, reversing most of the gains recorded in the previous two days. All three major U.S. indices finished firmly in negative territory, with the Dow Jones Industrial Average and the S&P 500 approaching their lowest levels in nearly four months.
By the closing bell, the indices had recovered modestly from their intraday lows. The Dow dropped 768.11 points, or 1.6%, ending the day at 46,225.15. The Nasdaq Composite declined 327.11 points, or 1.5%, to 22,152.42, while the S&P 500 fell 91.39 points, or 1.4%, to close at 6,624.70.
After an early decline, selling pressure intensified later in the session following a negative reaction to remarks by Federal Reserve Chair Jerome Powell after the central bank confirmed its widely anticipated decision to keep interest rates unchanged.
Speaking at the post-meeting press conference, Powell said the United States is seeing “some progress on inflation,” but “not as much as we had hoped.”
Although the Fed’s latest projections still suggest the possibility of a quarter-point rate cut later this year, Powell cautioned that “you won’t see the rate cut” unless inflation continues to move lower.
Powell also highlighted the difficult balance facing policymakers, stating that “the risks to the labor market are to the downside, which would call for lower rates, and the risks to inflation are to the upside, which would call for higher rates or not cutting anyway.”
The Fed’s comments followed its decision to maintain the target range for the federal funds rate at 3.50% to 3.75%, after also leaving rates unchanged at its January meeting.
Most Fed officials supported keeping rates steady, although Fed Governor Stephen I. Miran once again favored lowering rates by a quarter percentage point.
Earlier market weakness had already been triggered by a report from the U.S. Labor Department showing producer prices rose more sharply than expected in February.
The department said its producer price index for final demand increased by 0.7% in February after rising 0.5% in January. Economists had anticipated a smaller gain of 0.3%.
The report also showed that the annual increase in producer prices accelerated to 3.4% in February from 2.9% in January, while economists had expected the yearly pace to remain unchanged.
Combined with the recent surge in crude oil prices tied to the Middle East conflict, the data has heightened concerns about the outlook for inflation.
Gold-related stocks dropped sharply as the price of the precious metal declined, pushing the NYSE Arca Gold Bugs Index down 6.4% to its lowest closing level in two months.
Airline stocks also experienced notable weakness, with the NYSE Arca Airline Index falling 3.0%.
Telecommunications shares were also under pressure, dragging the NYSE Arca North American Telecom Index down 2.7%.
Housing, retail and pharmaceutical stocks also posted notable declines, joining most other major sectors in moving lower.
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