U.S. stock futures pointed to a weaker opening on Thursday, suggesting markets could retreat after the strong rally recorded in the previous trading session.
Investors may be inclined to take profits after Wednesday’s surge as concerns resurface about the stability of the Middle East ceasefire. Iran has accused both the United States and Israel of breaching the agreement.
Iran’s deputy foreign minister, Saeed Khatibzadeh, said in an interview with the BBC that Tehran has again shut the Strait of Hormuz.
Khatibzadeh described Israeli strikes on Lebanon earlier in the day as an “intentional grave violation” of the ceasefire agreement.
Oil markets reacted quickly to the developments. U.S. crude futures rebounded sharply, climbing more than 5% after plunging more than 16% during Wednesday’s trading.
“There is an air of renewed nervousness pervading financial markets after the euphoria which was initially prompted by the US-Iran ceasefire,” said Dan Coatsworth, head of markets at AJ Bell.
“This agreement already seems to be fraying at the edges – with continued strikes by Israel on Lebanon a key sticking point,” he added. “With talks on a lasting deal yet to begin it’s understandable that investors are taking a circumspect view.”
Late Wednesday, President Donald Trump wrote in a Truth Social post that U.S. troops would remain in the region until a “real agreement” with Iran is achieved and “fully complied with.”
Despite the emerging concerns, stocks posted strong gains during Wednesday’s session, with the major indexes finishing at their highest levels in roughly a month.
The rally followed a mixed performance on Tuesday. The Dow Jones Industrial Average advanced 1,325.46 points, or 2.9%, to 47,909.92. The Nasdaq Composite jumped 617.15 points, or 2.8%, to 22,635.00, while the S&P 500 rose 165.96 points, or 2.5%, to 6,782.81.
The initial surge on Wall Street was driven by reports that the United States, Israel and Iran had agreed to a temporary two-week ceasefire.
In a Truth Social post on Tuesday evening, President Trump said he had agreed to halt bombing operations against Iran for two weeks, provided Tehran accepted the complete, immediate and safe reopening of the Strait of Hormuz.
Trump said Washington had received a 10-point proposal from Iran that he believed was a “workable basis on which to negotiate,” adding that the two-week pause would allow time for the agreement to be finalized.
Iran’s Foreign Minister Abbas Araghchi later indicated that the Strait of Hormuz would reopen for two weeks if attacks against Iran were halted.
The ceasefire announcement sent oil prices sharply lower, with U.S. crude futures plunging more than 15% and falling well below $100 per barrel.
“The positive market reaction is understandable as a two-week ceasefire raises hope for a complete end to the conflict,” Coatsworth said.
“The ceasefire gives the world a moment to breathe and take stock of events,” he added. “Unfortunately, there is no guarantee that everything will return to normal.”
Airline stocks were among the top performers during Wednesday’s rally, with the NYSE Arca Airline Index jumping 7.3% to its highest closing level in a month.
Semiconductor shares also rallied strongly, driving the Philadelphia Semiconductor Index up by 6.3%.
Networking stocks joined the advance, pushing the NYSE Arca Networking Index higher by 5.3%.
Housing, computer hardware and financial stocks also recorded notable gains, while oil producers and natural gas companies moved lower, diverging from the broader market trend.
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