Dow Jones, S&P 500 and Nasdaq index futures are currently pointing to a sharply lower open on Friday, with stocks likely to see further downside following the weakness seen in the previous session.
The futures saw further downside following the release of a closely watched Labor Department report showing U.S. unemployment unexpectedly decreased in the month of February.
The report said non-farm payroll employment slumped by 92,000 jobs in February after jumping by a downwardly revised 126,000 jobs in January.
Economists had expected employment to increase by 60,000 jobs compared to the addition of 130,000 jobs originally reported for the previous month.
The Labor Department also said the unemployment rate ticked up to 4.4 percent in February from 4.3 percent in January, in line with economist estimates.
A continued surge by the price of crude oil is also likely to weigh on Wall Street, with U.S. crude oil futures soaring to their highest levels in almost two years.
Crude oil has skyrocketed over the past week as the U.S.-Iran conflict spreads across the Middle East, leading to concerns about a potential energy crisis.
As the Middle East conflict enters its seventh day, Israel has intensified air strikes on Iran, while the U.S. said its attacks on Iran are going to “surge dramatically.”
President Donald Trump has said the U.S. wants to be involved in the process of choosing the person who is going to lead Iran into the future. He also encouraged Iranian Kurdish forces to go on the offensive.
After turning in a strong performance during Wednesday’s session, stocks moved back to the downside during trading on Thursday. The major averages all moved lower, with the Dow slumping to its lowest closing level in well over two months.
The major averages saw a notable recovery attempt in the final hour of trading but still closed in negative territory. The Dow tumbled 784.67 points or 1.6 percent to 47,954.74, the S&P 500 slid 38.79 points or 0.6 percent to 6,830.71 and the Nasdaq fell 58.50 points or 0.3 percent to 22,748.99.
Concerns about the impact of sharply higher energy prices weighed on Wall Street, as the price of crude oil resumed the surge seen early in the week.
After ending Wednesday’s trading session modestly higher, the price of crude oil skyrocketed to over $80 a barrel.
The spike in crude oil prices comes amid ongoing supply disruption worries due to the expanding conflict in the Middle East.
Iran has claimed it struck a U.S. oil tanker in the northern Persian Gulf, raising fears of a wider conflict after the Islamic republic threatened to halt shipping through the vital Strait of Hormuz.
Defense Secretary Pete Hegseth has also signaled a possible longer time frame for the conflict than has previously been floated by the Trump administration, saying the war could last up to eight weeks but might be over sooner.
“Oil is so important to the world’s economy and to see the price go up so quickly in just a week could leave investors feeling dazed and confused,” said Dan Coatsworth, head of markets at AJ Bell.
He added, “The Middle East situation is unfolding at a rapid pace, and investors are finding it hard to make a firm call on whether there will be a sustained energy crisis or just a short, sharp shock.”
Meanwhile, a day ahead of the release of the more closely watched monthly jobs report, the Labor Department released a report showing first-time claims for U.S. unemployment benefits came in flat in the week ended February 28th.
Airline stocks moved sharply lower due to concerns about the impact of the Middle East conflict, dragging the NYSE Arca Airline Index down by 5.9 percent to a three-month closing low.
Substantial weakness was also visible among gold stocks amid a decrease by the price of the precious metal, with the NYSE Arca Gold Bugs Index plunging by 4.2 percent.
Steel, telecom, housing and biotechnology stocks also saw significant weakness, while software and oil stocks bucked the downtrend.