U.S. stock futures edged lower early Thursday, retreating from the S&P 500 and Nasdaq's all-time highs, as Brent crude oil prices remained above $103 a barrel amid escalating shipping tensions in the Strait of Hormuz. The pullback comes as Wall Street weighs the impact of geopolitical risks against a strong earnings season.
Brent crude climbed 1.2% to $103.17, while U.S. crude rose 1.3% to $94.16, following Iran's seizure of two vessels in the strategic waterway. The strait, which previously carried roughly 20% of global daily oil, has become a flashpoint, with traders recalibrating expectations as hopes for a quick resolution fade, according to ING. The oil spike has injected fresh uncertainty into markets already on edge.
Wednesday's rally was notable: the S&P 500 gained 1.05% to close at a record 7,137.90, and the Nasdaq rose 1.64% to 24,657.57, also a new high. The Dow added 0.69%. Micron set another record, and the Philadelphia chip index extended its winning streak to 16 consecutive sessions, the longest ever.
In after-hours trading, Tesla (TSLA) dropped 2.4% after Elon Musk announced 2026 capital expenditures would exceed $25 billion, up from a $20 billion forecast in January. The company also flagged that free cash flow would turn negative for the remainder of the year. IBM (IBM) slid 6.5% after hours, weighed down by sluggish software growth that reignited concerns about AI competition, despite revenue and profit exceeding expectations.
GE Vernova (GEV) surged 13.75% after raising its 2026 revenue and margin targets, driven by demand for gas turbines and grid equipment tied to data-center buildouts. CEO Scott Strazik projected backlog and slot reservations of at least 110 gigawatts by year-end. Boeing (BA) climbed 5.53% after posting a smaller-than-expected quarterly loss, with CEO Kelly Ortberg calling it 'a good start' and noting no signs of delivery delays from airline clients due to the Middle East conflict.
The oil price surge is already impacting airline forecasts. United Airlines (UAL) warned that rising jet-fuel costs would hit second-quarter and full-year earnings, estimating it can offset only 40% to 50% of the increase through fares and other measures. Delta Air Lines (DAL) has scaled back expansion plans, while Alaska Air Group (ALK) scrapped its full-year outlook.
Market analysts remain cautious. Charu Chanana, chief investment strategist at Saxo, noted that the oil spike highlights investor jitters about geopolitical tail risks. Laura Cooper at Nuveen remarked that while markets have been 'remarkably effective at looking through risks,' the number of unresolved threats continues to mount. Stephen Massocca, senior vice president at Wedbush Securities, said the market is eager for a beneficial outcome in the Gulf but warned that a prolonged conflict could sap earnings momentum.
First-quarter earnings growth is tracking near 14%, according to LSEG data. However, a Reuters survey of 103 economists indicated the Federal Reserve is unlikely to cut rates before late 2026, as inflation pressures from the conflict persist. With record highs already posted, Wall Street enters Thursday's session facing another oil surge and heightened uncertainty.
