US stock futures indicated a weak start to Thursday’s trade on 28 May, as renewed tensions in West Asia triggered a rebound in crude oil prices, reinforcing concerns that inflation could remain elevated and keep interest rates higher for longer.
S&P 500 futures slipped 0.3%, while Nasdaq 100 contracts dropped 0.5% and Dow Jones Industrial Average futures declined 0.4%. In the previous session, all three benchmark indices had scaled fresh record highs.
For the week so far, the S&P 500 is up 0.20%, and if it closes higher, it will mark the index’s longest weekly winning streak since December 2023.
Tehran reportedly targeted a US airbase on Thursday after Washington launched fresh strikes on Iran. The move came hours after US President Donald Trump rejected reports suggesting he was close to reaching a compromise deal with Iran.
US Central Command said Kuwait intercepted missiles launched by Iran late Wednesday night, describing the attack on one of America’s key allies in the Persian Gulf as an “egregious ceasefire violation.”
The US and Iran have traded strikes throughout the week, even as Trump repeatedly expressed confidence that his administration was making progress in negotiations aimed at ending the conflict. The latest attacks clouded hopes of a near-term resolution in West Asia, which had earlier pulled crude oil prices lower and boosted global risk appetite.
Concerns over oil-driven inflation are also rising, prompting central bankers to increasingly warn that interest rates may need to stay elevated. Central banks, including the US Federal Reserve, have previously indicated that rate hikes could be warranted if inflation remains above the 2% target.
Meanwhile, the rally in chipmakers, which had helped Wall Street hit multiple record highs in May, also lost momentum in the previous session.
Investors are now awaiting the personal consumption expenditures (PCE) data due later in the day, the Federal Reserve’s preferred inflation gauge, for further clues on the monetary policy path under new Fed Chair Kevin Warsh.
Money markets currently expect the Fed to remain on hold for the rest of the year, though some traders are still pricing in the possibility of a 25-basis point rate hike in December.
Crude prices rebound
Amid renewed tensions, Brent crude futures climbed toward $97 per barrel, rebounding from losses in the previous session, while the US benchmark WTI crude rose above $91 per barrel, touching an intraday high of $91.
In the current week, Brent crude is still down around 9% after declining 5.2% in the previous week. However, crude prices are still nearly 30% higher compared to levels seen before the escalation of the Middle East conflict.
US stocks in focus today
Among pre-market movers, Marvell Technology slipped 2.7% after reporting first-quarter results. The company’s shares have more than doubled so far this year. HP fell 1.2% following its second-quarter results, with the company warning that rising memory costs could pressure margins, according to Reuters.
On the gaining side, Snowflake soared 37.6% after the data analytics firm raised its annual product revenue forecast and announced a five-year AI infrastructure deal worth $6 billion with Amazon Web Services. Peers Datadog and MongoDB gained 5.7% and 10.7%, respectively.
Drone-related companies also rallied after The Wall Street Journal reported that the Trump administration was in talks to fund drone firms. Unusual Machines jumped 27.6%, while AeroVironment and Kratos Defence & Security Solutions advanced 9.8% each, according to the report.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
