The US stock market is likely to open lower in Thursday’s trading session, March 12, as futures of the three key averages—the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite—are trading lower by 0.3%, 0.5%, and 0.3%, respectively, in pre-market trading as crude oil prices continue to march higher, forcing traders to dial back expectations of US interest rate cuts.
The US-Israel war with Iran has entered its 13th day, with escalations showing little sign of abating, as both sides continue to ramp up attacks on each other, firing missiles and drones, with Iran especially targeting energy infrastructure and US embassy offices across the Gulf regions, keeping crude oil prices in the boiling zone.
On Tuesday, crude showed some pullback, only to rebound later as Brent futures were back above $100 per barrel in today’s session after Iran continued to strike ships in the region’s waters.
Three more foreign ships were struck in the Persian Gulf overnight as attacks intensify on vessels sailing through or near the strategically vital Strait of Hormuz, CNBC reported, citing sources.
The latest incidents come after three separate vessels sustained damage in Gulf waters on Wednesday, as Iran warned oil prices could climb to $200 a barrel, the report showed.
The ramped-up attacks by Iran are aimed at generating enough global economic pain to pressure the United States and Israel to end the war. However, there were no signs that the conflict was subsiding.
US President Donald Trump, speaking at a Wednesday event in Kentucky, promised to “finish the job,” even though he claimed Iran is “virtually destroyed.”
Iran has also continued to target oil fields and refineries in Gulf Arab nations and effectively stopped cargo traffic through the narrow Strait of Hormuz, through which a fifth of all traded oil passes.
In response, the International Energy Agency agreed to release 400 million barrels of oil from emergency reserves.
Investors await key economic data releases
Investors are awaiting key US economic data, including weekly Initial Jobless Claims today and tomorrow’s Core PCE Price Index, along with GDP numbers, which could influence expectations around the Federal Reserve’s rate outlook.
The US Federal Reserve is scheduled to meet on March 18, where policymakers are widely expected to hold rates steady, with traders anticipating only one 25-basis-point cut, possibly in September.
Meanwhile, February inflation came in line with forecasts, showing stable but above-target CPI. However, concerns have mounted that higher energy prices will fuel inflation in March, as Brent crude prices are up 26% in March so far.
Airline stocks on track for biggest monthly losses in a year
Airline stocks, which are sensitive to crude oil prices, are on track for their biggest monthly losses in a year. Among individual stocks, American Airlines and Southwest Airlines were down over 1% each in premarket trading on Thursday, along with cruise stocks Norwegian Cruise Line Holdings and Royal Caribbean Group, according to Reuters.
Shares of American Airlines Group have crashed 15.6% in March so far, while those of Southwest Airlines were also down by 15%.
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