U.S. equity futures moved lower on Thursday as escalating attacks on energy infrastructure in the Middle East sent oil prices sharply higher. The Federal Reserve kept its interest rate outlook unchanged, leaving open the possibility of a rate cut later this year, though Chair Jerome Powell cautioned investors against placing too much weight on the projections. Several other major central banks are also expected to keep borrowing costs unchanged as uncertainty surrounding the conflict with Iran persists. Meanwhile, shares of Micron (NASDAQ:MU) declined in premarket trading after the chipmaker unveiled plans for a significant increase in capital spending.
Futures point to weaker open
Futures tied to the major U.S. stock benchmarks signaled a softer start to trading after renewed strikes on key oil facilities in the Middle East drove crude prices higher.
At 04:16 ET, Dow futures were down 38 points, or 0.15%. S&P 500 futures slipped 11 points, or 0.2%, while Nasdaq 100 futures dropped 67 points, or 0.3%.
The main U.S. indices had already ended Wednesday’s session sharply lower after an attack on the South Pars oil field, located in the Iranian portion of the world’s largest natural gas reserve. Iran retaliated by targeting gas infrastructure in Qatar and Saudi Arabia, raising concerns that hostilities involving Iran, the United States and Israel could escalate into a broader regional conflict.
The strikes pushed energy prices upward, intensifying fears of renewed inflationary pressure across global economies. Investors are watching central bank policy decisions this week for signals on how policymakers expect inflation and interest rates to evolve in the coming months.
Adding to these concerns, U.S. producer price inflation data for February came in stronger than expected, suggesting that price pressures were already lingering in the U.S. economy before the escalation of the Iran conflict.
By the close of Wednesday’s trading, the Dow Jones Industrial Average had fallen 1.6%, the S&P 500 declined 1.4%, and the Nasdaq Composite dropped 1.5%.
Oil climbs past $112 per barrel
Oil prices continued to surge, with Brent crude futures — the global benchmark — rising well above $112 per barrel.
At 04:40 ET, Brent had jumped 7.8% to $115.78 per barrel, an increase of roughly $8. U.S. West Texas Intermediate crude futures rose 1.6% to $97.01 per barrel. The spread between WTI and Brent has widened to its largest level in over a decade, partly due to releases from the U.S. strategic petroleum reserve.
European gas prices also surged by more than 25% after Iranian strikes hit Ras Laffan in Qatar, the world’s largest liquefied natural gas production hub, which alone accounts for about one-fifth of global LNG supply.
“The move to strike Iranian energy assets is odd, given that the U.S. administration has been trying over the last couple of weeks to ease the upward pressure on oil prices,” analysts at ING said in a statement.
However, President Donald Trump denied that either the United States or Qatar had any role in the strike on South Pars, saying the attack was carried out by Israel.
The latest attacks on energy infrastructure have added further strain to oil markets already dealing with disruptions around the Strait of Hormuz. Roughly 20% of the world’s oil shipments pass through the narrow waterway south of Iran, but many vessels have avoided the route due to fears of potential Iranian retaliation.
There are few signs that the three-week-old conflict is easing. According to Reuters, U.S. officials are considering deploying thousands of additional troops to reinforce operations in the Middle East.
Fed leaves rates unchanged
Despite the surge in oil prices clouding the inflation outlook, the Federal Reserve’s policy decision on Wednesday left the door open to possible rate cuts later this year.
Lower interest rates can help stimulate economic growth and support a weakening labor market, though they also carry the risk of reigniting inflation.
In the Fed’s latest quarterly projections, 12 of the 19 policymakers indicated they still expect at least one rate reduction in 2026, the same outlook presented in December.
However, speaking after the central bank left rates unchanged within the 3.5%–3.75% range, Powell warned that investors should treat the projections with caution “even more than usual.”
He suggested that current borrowing costs are near a neutral level — neither stimulating nor restricting economic activity — implying limited room for rate cuts, especially if energy-driven inflation persists.
Global central banks under watch
The Bank of Japan also kept its policy rate unchanged on Thursday, as widely anticipated, while warning about the inflationary risks associated with rising energy prices.
The BOJ maintained its overnight call rate at 0.75% following an almost unanimous decision by its nine-member policy board. Board member Hajime Takata was the only dissenter, advocating a 25 basis point rate hike amid increasing inflation risks.
Officials highlighted risks to price stability over the medium and long term, noting that higher oil prices pose a particular challenge for Japan, which relies heavily on imported energy passing through the Strait of Hormuz.
“Risks to the outlook include the future course of the situation in the Middle East as well as developments in crude prices,” the BOJ said in a statement.
Economists at Capital Economics said the BOJ’s remarks also suggested that further rate increases could be considered if inflation continues to strengthen.
Later in the session, investors will turn their attention to policy announcements from the European Central Bank and the Bank of England, both of which are also expected to keep interest rates unchanged. Switzerland’s central bank likewise left rates on hold, citing increased economic uncertainty stemming from the Iran conflict.
Micron earnings
Micron Technology reported a sharp jump in revenue and profits for its fiscal second quarter, but its shares fell more than 4% in premarket trading after the company announced plans to significantly boost spending on manufacturing capacity.
The chipmaker said it plans to invest more than $25 billion in new fabrication facilities in fiscal 2026, about $5 billion more than previously forecast.
Micron reported adjusted earnings per share of $12.20 for the quarter ended Feb. 26, compared with $1.56 a year earlier and well above analyst expectations of $8.79. Revenue surged 196% year-on-year to $23.86 billion from $8.05 billion, exceeding estimates of $19.19 billion.
Gross margin reached a record 74.9%, rising 18 percentage points from the prior quarter.
“In the AI era, memory has become a strategic asset for our customers, and we are investing in our global manufacturing footprint to support their growing demand,” Chief Executive Sanjay Mehrotra said.
