U.S. stock index futures moved lower early Thursday, snapping a brief streak of record highs as renewed geopolitical tensions between the United States and Iran sent oil prices sharply higher. The pullback comes just a day after the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all closed at all-time peaks.
Dow Jones futures fell 53 points, or 0.10%, to 50,675 as of 5:47 a.m. EDT. S&P 500 futures declined 10.75 points, or 0.14%, to 7,529.25, while Nasdaq 100 futures dropped 93.75 points, or 0.31%, to 29,953.50. The moves reflect a cautious turn in risk appetite as investors weigh the potential impact of higher energy costs on inflation and monetary policy.
Oil prices surged on the geopolitical shock, with Brent crude rising 3.7% to $97.79 per barrel. The spike in crude, combined with a strengthening U.S. dollar and a rise in Treasury yields—the 10-year note hit 4.53%—added pressure on equities. The dollar gained broadly as safe-haven flows intensified, while Asian shares fell overnight.
Investors are now squarely focused on the release of the Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, due later Thursday from the Bureau of Economic Analysis. The April PCE report is expected to provide critical clues on whether inflation is moderating enough for the Fed to hold off on further rate hikes.
“A higher-than-expected print will further boost hawkish Federal Reserve expectations and fuel the probability of a rate hike by year-end,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank. Conversely, an in-line or weaker reading could ease rate hike bets, though the risk of tighter policy remains elevated as long as geopolitical uncertainty and high energy costs persist, she added. Money markets currently price in a steady rate for the rest of the year, but still assign some probability to a 25-basis-point increase in December.
Earnings and artificial intelligence have provided strong support for stocks in recent months. “We have strong AI secular tailwinds that were confirmed through the earnings we saw,” noted Anthony Saglimbene, chief market strategist at Ameriprise. However, he cautioned that the current environment is less clear with higher energy prices, rising rates, and stickier inflation. A Reuters poll of 47 market professionals sees the S&P 500 ending 2026 at 7,620, just above current all-time highs, and reaching 8,050 by mid-2027. LSEG data cited by Reuters points to nearly 25% expected earnings growth for the S&P 500 in 2026, largely driven by AI-focused stocks and chipmakers.
In premarket trading, Marvell Technology (MRVL) slid 2.2% after reporting first-quarter results. HP (HPQ) fell 1.4% following its fiscal second-quarter earnings and a warning that higher memory costs would squeeze margins. Dell (DELL) is set to report later, keeping tech hardware in focus.
Defense and drone-related stocks surged on speculation of new government funding. Unusual Machines jumped 33%, AeroVironment (AVAV) gained 9.1%, and Kratos Defense & Security Solutions (KTOS) rose 11.2% after the Wall Street Journal reported that the Trump administration is in talks to fund drone companies, according to Reuters.
Traders are now watching the PCE print and oil price dynamics. A stronger-than-expected inflation report combined with elevated crude could deepen the current dip, potentially triggering a rates shock. Conversely, a soft inflation reading or any easing of U.S.-Iran tensions might lower yields and reignite AI-led buying, at least in the near term.
