U.S. stock futures are pointing to a weaker start on Thursday, suggesting further losses may follow after equities came under notable pressure in the previous session.
Investor sentiment is being weighed down by rising tensions in the Middle East after attacks targeted key energy infrastructure across the region.
Israel carried out strikes on Iran’s South Pars natural gas fields as well as oil facilities in Asaluyeh, while an Iranian missile strike on Qatar’s Ras Laffan energy complex caused “extensive damage,” according to the country’s state-owned energy company.
In a post on Truth Social, President Donald Trump warned that the United States could “massively blow up the entirety of the South Pars Gas Field at an amount of strength and power that Iran has never seen or witnessed before” if further attacks on Qatar occur.
Brent crude prices, which briefly surged close to $120 per barrel after the latest escalation, have pulled back somewhat but remain above $113 per barrel.
Stocks fell sharply during Wednesday’s session, erasing most of the gains from the two prior trading days. The major U.S. indices all posted significant declines, with both the Dow Jones Industrial Average and the S&P 500 nearing their lowest levels in almost four months.
By the close, the indices had recovered slightly from their session lows. The Dow dropped 768.11 points, or 1.6 percent, to finish at 46,225.15. The Nasdaq Composite fell 327.11 points, or 1.5 percent, to 22,152.42, while the S&P 500 declined 91.39 points, or 1.4 percent, to 6,624.70.
After an initial dip earlier in the day, selling pressure intensified in late trading as investors reacted negatively to remarks from Federal Reserve Chair Jerome Powell following the central bank’s expected decision to keep interest rates unchanged.
Speaking at the post-meeting press conference, Powell said the U.S. economy has made “some progress on inflation” but “not as much as we had hoped.”
While the Fed’s latest projections suggest the possibility of a quarter-point rate cut later this year, Powell cautioned that “you won’t see the rate cut” if inflation does not continue to improve.
Powell also noted that the central bank faces a challenging policy environment in which “the risks to the labor market are to the downside, which would call for lower rates, and the risks to inflation are to the upside, which would call for higher rates or not cutting anyway.”
The comments followed the Fed’s decision to keep the target range for the federal funds rate unchanged at 3.50 to 3.75 percent, after also leaving rates steady at its previous meeting in January.
Most policymakers supported maintaining the current rate level, though Fed Governor Stephen I. Miran again favored lowering rates by a quarter of a percentage point.
Earlier weakness in the market had already been triggered by a report from the Labor Department showing that U.S. producer prices rose more than anticipated in February.
According to the report, the producer price index for final demand increased 0.7 percent in February after rising 0.5 percent in January. Economists had expected a more modest gain of 0.3 percent.
The annual increase in producer prices accelerated to 3.4 percent in February, up from 2.9 percent the previous month. Analysts had forecast the yearly pace would remain unchanged.
Combined with the recent surge in crude oil prices linked to the Middle East conflict, the data intensified concerns about the outlook for inflation.
Gold-related stocks recorded steep losses as the price of the precious metal dropped sharply, sending the NYSE Arca Gold Bugs Index down 6.4 percent to its lowest closing level in two months.
Airline stocks were also under pressure, with the NYSE Arca Airline Index sliding 3.0 percent.
Telecommunications shares weakened as well, pulling the NYSE Arca North American Telecom Index down 2.7 percent.
Housing, retail and pharmaceutical stocks also posted notable declines, joining most other major sectors in moving lower.