U.S. Stock Index Futures Dip Amid Geopolitical Tensions

By Johann M Cherian and Purvi Agarwal
(Reuters) – U.S. stock index futures dipped on Wednesday due to geopolitical tensions in the Middle East and a domestic port strike, creating caution among investors ahead of important labor data.

Wall Street’s main indexes started the final quarter weakly, with the S&P 500 and Nasdaq hitting two-week lows as investors sold off riskier assets after Iran retaliated against Israel.

Markets steadied as Israel and the U.S. promised to retaliate, but oil prices rose over 3%, anticipating supply disruptions from the region. Oil stocks like SLB and Occidental Petroleum saw gains of 2.3% and 1.6%, respectively, in premarket trading.

Defense stocks including Lockheed Martin and RTX also gained following a record high in the S&P 500 aerospace and defense index.

ING analysts noted that while the situation is volatile, a measured response from Israel may lead markets to believe both nations prefer de-escalation.

At 07:08 a.m. ET, Dow E-minis lost 168 points (0.40%), S&P 500 E-minis fell 15.5 points (0.27%), and Nasdaq 100 E-minis were down 43.5 points (0.22%).

Futures for the small-cap Russell 2000 slipped 0.7%, and Treasury bonds dipped following a recent surge.

The CBOE Volatility Index, a measure of market fear, hovered near a three-week high at 19.4.

Economic data from the ADP National Employment survey is expected to be released at 08:15 a.m. ET, ahead of the important non-farm payrolls data due Friday.

Comments from various policymakers are also scheduled throughout the day.

After a stronger September, the markets reacted positively to the U.S. Federal Reserve’s 50-basis-point rate cut, aimed at supporting the jobs market, a central piece of their dual mandate.

Odds of a quarter-percentage-point rate reduction at the November Fed meeting have risen to 63.2%, from 42.6% a week ago.

Meanwhile, a dockworkers’ strike on the East and Gulf coasts entered its second day, potentially costing the U.S. economy around $5 billion per day, according to JPMorgan analysts.

Some companies, including Walmart, reported that they had prepared for the strike, showing flat share performance in premarket trading.

Analysts warn that the increase in oil prices and the port strike could drive inflation, which recently approached the Fed’s 2% target.

Nike saw a major decline of 5.6% following the withdrawal of its annual revenue forecast with a new CEO incoming.

Humana experienced an 11% drop after forecasting a decrease in Medicare Advantage plan enrollment for 2025.