President Donald Trump vowed to retain military assets in the Middle East until a peace deal was reached with Iran and warned of a major escalation if it failed to comply, a day after fighting in the region continued despite Tuesday’s ceasefire.
Tehran warned that there would be no deal unless Israel ceases bombing Lebanon.
Few signs of traffic moving through the Strait of Hormuz heightened uncertainty around energy shipments, leading to a rebound in oil prices, though they remained below US$100 a barrel. US energy stocks inched slightly higher in premarket trading.
The S&P 500 and the Nasdaq posted their biggest one-day jumps in over a week on Wednesday, as global markets cheered the two-week ceasefire, while the Dow marked its steepest rise in a year.
“While the crisis’ peak is likely behind us, and markets appear to think that is the case, it may still be too early to aggressively extend risk,” said analysts at BCA Research.
“With volatile headlines and rhetoric shifting… Hormuz flows will determine whether any truce is truly working. Risk assets could still rally even if kinetic attacks continue, provided Hormuz shows credible signs of reopening.”
At 7.10am, Dow E-minis were down 226 points, or 0.47%, S&P 500 E-minis were down 28 points, or 0.41%, and Nasdaq 100 E-minis were down 88 points, or 0.35%.
On Thursday, investors will parse the personal consumption expenditure (PCE) figures for February – the Federal Reserve’s preferred inflation gauge – with economists polled by Reuters expecting the PCE index to hold steady at 2.8%, unchanged from January.
A final reading of economic growth in the fourth quarter (Q4) will also be watched.
Friday’s consumer prices index number for March will grab the spotlight as investors wait to see the economic impact of elevated oil prices stemming from the conflict.
Money market participants are expecting only about 30% chances of a 25 basis-point interest rate cut by end-2026, compared with a 56% chance a day ago, per LSEG-compiled data.
They expected two cuts this year before the war broke out, while bets for a rate hike in December had also risen during the conflict.
Minutes from the central bank’s March meeting showed on Wednesday a growing group of policymakers felt last month that rate hikes might be needed to counter inflation that continued to exceed the central bank’s 2% target, especially as the war drove up prices.
Among premarket movers, Applied Digital shares dropped 3.8% after the data centre operator’s third-quarter net loss widened from a year earlier.
Coreweave jumped 7% after the cloud infrastructure firm announced an expanded US$21 billion cloud deal with Meta Platforms.