U.S. stock futures exhibited a mixed performance early Thursday, reflecting divergent market forces. The Nasdaq Composite was poised for gains, buoyed by renewed buying interest in semiconductor stocks, while the Dow Jones Industrial Average edged lower as escalating geopolitical tensions between the United States and Iran continued to weigh on investor sentiment. According to data from the Associated Press, Nasdaq futures rose 0.5%, S&P 500 futures inched up 0.1%, and Dow futures slipped 0.1%.
Geopolitical Tensions and Oil Markets
The latest flare-up in U.S.-Iran relations has kept oil markets under significant pressure. The U.S. military confirmed additional strikes on Iranian targets to ensure safe passage through the strategically vital Strait of Hormuz, a chokepoint for global energy supplies. In retaliation, Iran launched attacks on Kuwait and Bahrain, further heightening regional instability. Before the conflict escalated, roughly 20% of the world's oil and liquefied natural gas (LNG) transited through the strait, according to Reuters.
Oil prices edged higher on Thursday. Brent crude rose 53 cents to $78.55 per barrel, while U.S. West Texas Intermediate added 39 cents to $73.91. Saxo Bank analyst Ole Hansen described the market as "very nervous," and Aneeka Gupta of WisdomTree projected Brent would likely trade within a $75-$85 range over the coming month.
Market Reaction and Fed Policy
The S&P 500 closed Wednesday down 0.28% at 7,482.71 following former President Trump's comment that the Iran peace deal is "over." The Dow fell 1.09% to 52,348.39, while the Nasdaq managed a 0.20% gain to 25,870.65, driven by semiconductor stocks. Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, noted that "duration is the key here," warning that a direct hit to Iranian infrastructure could trigger a more pronounced market move. The downside scenario, he explained, involves further attacks, rising fuel prices, pressure on travel stocks, and reduced room for the Federal Reserve to cut rates.
The Federal Reserve adopted a cautious tone in its June meeting minutes, keeping the federal funds rate at 3.50%-3.75%. Some members argued for a rate hike, and traders now anticipate at least one more 25-basis-point increase by year-end.
Chip Stocks Lift Broader Market
Semiconductor shares provided critical support to the broader market. Broadcom surged 4.8% on Wednesday after Apple announced a chip-supply deal worth over $30 billion. Nvidia closed up 3.65%. Meanwhile, Meta Platforms dropped 2% Wednesday and continued to decline in premarket trading after Reuters reported the company plans to launch its own AI chip in September.
Corporate Earnings Highlights
PepsiCo reported second-quarter revenue of $24.18 billion, up 6.4% year-over-year and above analyst expectations. However, softer sales in North America reflected more cautious consumer spending. Organic revenue, which excludes foreign exchange and acquisitions, rose 2.4%. The company maintained its full-year guidance unchanged.
Levi Strauss raised its adjusted earnings per share guidance for the full year to $1.46-$1.52, up from $1.42-$1.48, but this fell short of the FactSet consensus estimate of $1.51. Shares declined in after-hours trading, as reported by The Wall Street Journal.
IPO and Market Sentiment
SK Hynix, the South Korean memory-chip maker and key Nvidia supplier, is set to begin trading its U.S.-listed shares on Friday. The company priced a $28 billion U.S. share sale that was more than seven times oversubscribed, according to Reuters, signaling strong investor appetite for AI-related plays despite recent tech volatility.
Overall, traders are not fleeing risk but are becoming more selective. Tyler Rosenlicht, who oversees natural-resource equities at Cohen & Steers, summed up the mood in The Wall Street Journal: "It’s really tough to be confident in anything."
