U.S. stock index futures pointed to a higher open on Wednesday, suggesting equities may rebound after finishing the previous session significantly lower despite recovering from their intraday lows.
Investors may be looking to take advantage of lower valuations after Tuesday’s early sell-off pushed the major benchmarks to their weakest levels in three months.
Early buying sentiment could also be supported by a retreat in crude oil prices, which are pulling back after recently climbing to their highest levels since June.
The decline in oil prices followed an announcement from President Donald Trump that he had directed the U.S. Development Finance Corporation to provide political risk insurance and guarantees to protect maritime trade routes in the Middle East.
Trump also said the U.S. Navy would escort oil tankers through the Strait of Hormuz if required, pledging to ensure the “free flow of energy to the world.”
These measures helped ease concerns over potential disruptions to global energy supplies stemming from the ongoing conflict that began after U.S. and Israeli strikes on Iran.
Futures remained in positive territory after payroll processor ADP released data showing that U.S. private-sector employment increased more than expected in February.
On Tuesday, stocks attempted another recovery after an early plunge but failed to regain as much ground as they had the previous day, ultimately closing the session sharply lower.
Although the major indices bounced from their lowest levels of the day, they still finished firmly in the red.
The Dow Jones Industrial Average fell 403.51 points, or 0.8%, to 48,502.27 after earlier dropping more than 1,200 points to its lowest intraday level in nearly three months.
The Nasdaq Composite declined 232.17 points, or 1.0%, to 22,516.69, while the S&P 500 lost 64.99 points, or 0.9%, closing at 6,816.63. During the session, the indices had fallen by as much as 2.7% and 2.5%, respectively, hitting three-month lows.
The early sell-off on Wall Street was largely driven by concerns surrounding the escalating conflict in the Middle East.
As the confrontation entered its fourth day, President Donald Trump suggested the fighting could last four to five weeks but might “go far longer than that.”
Defense Secretary Pete Hegseth provided few specifics about the length of the operation against Iran but said it would not be “endless,” describing the situation as a “generational” opportunity to reshape the Middle East.
Oil prices have continued to climb in response to the conflict, fueling fears that higher energy costs could reignite inflation.
The extended rally in crude came after reports that Iran had closed the Strait of Hormuz in retaliation for the U.S. and Israeli attacks and threatened to target any vessel attempting to pass through the strategic waterway.
Supply concerns intensified further following attacks on several oil refineries, including Saudi Aramco’s facility in Ras Tanura.
“The longer oil and natural gas prices remain elevated, the greater the risk of a meaningful impact on inflation which could mean higher interest rates, an event that’s typically negative for equity markets,” said Dan Coatsworth, head of markets at AJ Bell.
Despite the broader market’s attempt to recover, gold-related stocks continued to decline sharply following a steep drop in gold prices.
The NYSE Arca Gold Bugs Index tumbled 8.0%, extending its retreat from the record closing high reached last Friday.
Semiconductor shares also remained under heavy pressure, highlighted by a 4.6% fall in the Philadelphia Semiconductor Index.
Steel producers, computer hardware companies, networking firms and oil services stocks also recorded notable losses, while software stocks managed to move against the broader downward trend.