U.S. crude futures climbed above $92 a barrel in early trading on Thursday, creating a notable divergence in the equity futures market as technology shares lagged while the Dow industrials advanced. West Texas Intermediate crude rose 2.14% to $92.96 per barrel, while Brent crude gained 1.53% to $97.09. The jump in oil prices came amid renewed U.S.-Iran tensions, according to the Associated Press.
Futures Split as Oil Surges
By 8:00 a.m. EDT, Nasdaq-100 futures had slipped 0.26%, while Dow futures added 0.18%. The S&P 500 futures were down 0.03%, and Russell 2000 futures fell 0.08%. The divergence underscores the market's sensitivity to rising energy costs, which could reignite inflationary pressures. The 10-year Treasury yield remained near 4.8%, a level that increases the discount rate applied to growth stocks, making their future earnings less valuable.
Oil's advance accelerated after 4:00 a.m. EDT, with WTI rising 2.57% from that point, and Brent up 1.94%. The move was attributed to geopolitical risks, as the Associated Press linked the price increase to renewed fighting between the U.S. and Iran.
Corporate Earnings Drive Stock-Specific Moves
Corporate earnings added to the market's internal divide. Snowflake Inc. (NYSE: SNOW) surged 23.5% after raising its fiscal 2027 product revenue outlook to $6.07 billion from $5.84 billion. The company reported product revenue of $1.49 billion, a 37% year-over-year increase, according to its CEO Sridhar Ramaswamy in an SEC filing.
In contrast, Broadcom Inc. (NASDAQ: AVGO) slipped 3.6% despite reporting $16.7 billion in quarterly revenue from AI semiconductors. CEO Hock Tan noted that the AI business "grew 221% year-over-year," but the stock's decline suggests even that robust growth failed to meet investor expectations.
NetApp Inc. (NASDAQ: NTAP) dropped 9.3% after reporting a 30% rise in revenue to $2.03 billion and lifting its full-year revenue outlook to a range of $7.98 billion to $8.23 billion. The stock's negative reaction highlights the market's high bar for tech companies.
Sector ETFs Reflect Divergence
Sector exchange-traded funds mirrored the futures market's split. Energy (XLE) led with a 0.69% gain, followed by communication services (XLC) at 0.37% and materials (XLB) at 0.36%. Technology (XLK) lagged with a 0.41% decline, while staples (XLP) and utilities (XLU) were slightly lower. These ETFs serve as proxies and may not fully represent cash-session trading due to thin premarket liquidity.
Market Breadth and Upcoming Data
A comprehensive premarket advance-decline total was not available at the cutoff. Trading volume across the four index-futures contracts reached 96,850 contracts from 4:00 a.m., with 26,354 contracts traded during the last hour. The modest support in the final hour saw Dow futures rise 0.13% and Russell 2000 futures gain 0.16%, while Nasdaq futures eased 0.03%.
Investors are now looking ahead to economic data due at 8:30 a.m. EDT, including jobless claims, trade figures, and updated productivity numbers. The ISM services report is scheduled for 10:00 a.m. EDT.
The market's focus on oil and inflation is likely to persist, with traders watching for any signs that rising energy costs could derail the Federal Reserve's path toward easing. The divergence between the Dow and Nasdaq underscores the challenge of navigating a market where commodity prices and growth stocks are pulling in opposite directions.
