The US stock market is likely to open with sharp cuts in Tuesday’s trading session, March 3, as the futures of the three key averages, including the S&P 500, Dow Jones Industrial Average, and Nasdaq, are trading lower by 2%, 2%, and 2.5%, respectively, in pre-market trade.
The weakness comes as tensions between the US, Israel, and Iran continue to escalate, keeping crude oil prices elevated and intensifying concerns over rising consumer inflation.
Iran intensified its attacks, striking energy infrastructure in Gulf countries and tankers carrying crude oil. Tehran also reportedly attacked the US embassy in Riyadh, Saudi Arabia’s capital, with drones while vowing a full closure of the Strait of Hormuz, through which nearly 20% of global oil flows and over 40% of India’s crude imports transit.
An Iranian Revolutionary Guards senior official reportedly said on Monday that the Strait of Hormuz is closed and that Iran will fire on any ship trying to pass, Reuters reported, citing Iranian media.
The chokepoint off the coast of Iran handles a fifth of the world’s oil and a similar portion of liquefied natural gas.
These concerns have kept crude oil prices elevated for the fourth day. Global benchmark Brent rose above $80 a barrel to reach the day’s high of $82.24 in today’s trade, after spiking about 7% on Monday, while West Texas Intermediate was near $75.5.
On Monday, Saudi Aramco halted operations at its Ras Tanura refinery after a drone strike in the area. Qatar shut liquefied natural gas production at the world’s largest export facility after it was targeted in an Iranian attack.
Recent statements from the White House indicated that the ongoing conflict is likely to intensify in the coming days.
US President Donald Trump said the war, which began on Saturday with a strike that killed Iran’s Supreme Leader Ayatollah Ali Khamenei, was going “substantially” ahead of schedule but warned it could continue for more than four weeks.
Nvidia, Microsoft down in pre-market trade
Technology stocks such as Nvidia and Microsoft were down 3.1% and 1.8%, respectively, after gaining in the previous session. Nasdaq-listed memory names such as SanDisk slumped 8.4% and Western Digital lost 5.6%, also cooled off from a strong rally in February.
Oil and gas, as well as defence stocks, were among the few gainers. Occidental rose 3.7%, and Cheniere Energy climbed 9.8%, while Lockheed Martin gained 1.4% and AeroVironment added 2.7%.
Industries such as airlines and travel that are exposed to crude prices were knocked back for a second day. Delta and Royal Caribbean fell about 4% each.
Investors were worried that higher oil prices could stoke inflation across the broader economy and further complicate policy decisions for central bank officials already contending with price increases driven by tariffs.
Meanwhile, stocks staged a massive comeback on Monday, with the S&P 500 and Nasdaq erasing steep losses to close slightly higher. The Dow also closed well off its session lows.
(With inputs from Reuters)
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