Dow, S&P 500, Nasdaq futures turn higher as Iran war volatility continues

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US stock futures rose on Wednesday following a seesaw day on Wall Street as investors kept a watchful eye on signs the Iran conflict could break out into regional war.

Contracts on the S&P 500 (ES=F) and the Nasdaq 100 (NQ=F) both gained roughly 0.4%, in a solid reverse of earlier out-of-hours losses. Dow Jones Industrial Average (YM=F) futures added 0.2%, after the major US benchmarks closed sharply lower on Tuesday.

The conflict that has whipsawed stocks entered its fifth day on Wednesday with fresh strikes by Israel on Tehran as Iran awaits the funeral of Supreme Leader Ali Khameni, killed in weekend attacks. Worries over the fallout from hostilities helped drive Korea’s main benchmark to its biggest one-day crash on record.

Dip-buyers are seen as playing a part in the volatility on Wall Street, as geopolitical tensions send prices tumbling. However, some on Wall Street have warned against counting on President Trump to “chicken out” and rescue stocks.

Trump said on Tuesday that the US would provide insurance and escorts for oil tankers to try to restore traffic through the crucial Strait of Hormuz, stalled amid threats from Iran. The promise of safe passage comes as soaring oil prices threaten to bump up inflation, curbing the scope for US interest-rate cuts. Oil prices gained over 2%, with Brent crude futures (BZ=F) trading near $84 a barrel and West Texas Intermediate futures (CL=F) above $76.

Investors will watch for an ADP update on private payrolls due later to help set expectations for Federal Reserve action on interest rates, providing a labor market health check ahead of Friday’s crucial monthly jobs report.

Meanwhile, earnings take on a muted focus this week, with reports from Broadcom (AVGO), Costco (COST) and Alibaba (BABA) highlighting the coming days.

LIVE 6 updates

  • Gold gains as dip-buyers enter market despite dollar strength

    From Bloomberg:

    Gold advanced, recovering some of the losses in the previous session, as dip-buyers entered a market fraught with risk on the fifth day of war in the Middle East.

    Bullion climbed as much as 2%, clawing back ground after a four-day winning streak ended Tuesday. Traders are balancing gold’s risk premium against a stronger dollar, with a gauge of the US currency rallying about 1.5% this week. Bond yields advanced and surging energy prices heightened the risk of widespread inflation.

    That prompted traders to scale back bets on monetary easing, while a broad selloff across equities on Tuesday forced some investors to liquidate their positions to meet margin calls elsewhere in their portfolios.

    The gold market is experiencing a standard “portfolio risk-reduction move,” said Peter Kinsella, global head of forex strategy at Union Bancaire Privee, UBP SA. “It’s entirely consistent with what we have seen in previous conflicts.”

    Read more here.

  • Brian Sozzi

    Goldman’s still ‘no go’ on oil price super-surge

    Goldman Sachs still isn’t predicting oil (CL=F, BZ=F) will surge to $100-plus a barrel amid the escalation of the Israeli and US attacks against Iran.

    This is what its team just laid out this morning:

  • Jenny McCall

    Premarket trending tickers: Strategy, Ross Stores, Moderna and Gitlab

    Strategy (MSTR) stock rose 8% before the bell on Wednesday, following a 6% rise in bitcoin. Strategy is one of the largest corporate holders of the cryptocurrency.

    Ross Stores’ (ROST) stock jumped 5% during premarket trading on Wednesday following the release of its fourth-quarter results, which beat analyst estimates.

    Moderna (MRNA) stock rose 3% before the bell today. The pharmaceutical company said it had reached a deal to resolve a dispute relating to its COVID vaccine.

    GitLab (GTLB) shares fell 9% in premarket trading on Wednesday after the company announced it expects sales to slow this year. The software company outlined initiatives to help boost its guidance.

  • Global funds unwind hottest AI trades as inflation fears mount

    Bloomberg reports:

    Foreigners are fleeing from Asia’s hottest markets this year, as exuberance in the artificial-intelligence trade gives way to fears about an oil-driven inflation shock.

    Overseas investors sold about $3.1 billion of South Korean shares this week after offloading a record $13.7 billion last month. In Taiwan, they dumped another $3.6 billion, putting the market on track for the biggest weekly outflow since late December.

    The pullback has been concentrated in high-flying chipmakers that had propelled both markets to record highs until last month. In Korea, memory chip heavyweights Samsung Electronics Co. (005930.KS) and SK Hynix Inc. (000660.KS) have each fallen almost 20% this week, with the former headed for its worst two-day rout in almost five decades. Shares of Taiwan Semiconductor (2330.TW) Manufacturing Co. (2330.TW, TSM) are down nearly 7% this week.

    “Crowded longs in AI and everything else were sold aggressively in the race to bring down exposures across markets as Iran situation seems to have deteriorated,” said Matthew Haupt, portfolio manager at Wilson Asset Management in Sydney. The selloff has landed heavily on AI linked stocks, he added, as questions linger over whether the sector’s big capital spending plans can ultimately generate enough profits.

    Read more here.

  • Asian markets fall, Korean exchange closes as Iran fallout drives benchmarks down

    Reuters reports:

    Read more here.

  • Oil continues to rise as Hormuz blockade rattles markets

    Bloomberg reports:

    Read more here.

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