Stock futures are experiencing a period of calm as traders closely monitor the latest developments in the U.S.-Iran conflict. This comes after a volatile trading session for U.S. stocks, with major indices ending the day in the red. The S&P 500 slipped by 0.9%, the Dow Jones Industrial Average lost approximately 403 points (0.8%), and the Nasdaq Composite closed down 1%. All 11 sectors within the S&P 500 saw declines, with the materials sector being the hardest hit, dropping 2.7%.
The conflict has sparked concerns about the impact of rising oil prices on the U.S. economy and future monetary policy decisions. President Donald Trump's announcement that the U.S. will provide risk insurance for maritime trade through the Persian Gulf has further intensified these concerns. The Strait of Hormuz, a critical transit route for crude oil, has been disrupted by threats from the Iranian Revolutionary Guard, causing a halt in tanker traffic.
As a result, Brent crude oil futures settled 4.71% higher, while West Texas Intermediate crude futures advanced by 4.68%. However, both ended the day below their session highs. James McCann, a senior economist at Edward Jones, suggests that longer-term investors might find opportunities in the market, provided energy prices stabilize and moderate in the coming days and weeks.
Looking ahead, traders will be keenly watching the ADP private payrolls report, which is expected to show a significant increase in job additions in February. The consensus forecast predicts 48,000 jobs added, up from 22,000 in January. Additionally, investors will be closely examining the quarterly earnings reports from Abercrombie & Fitch, Broadcom, and Okta.
Goldman Sachs predicts that the U.S.-Iran war could significantly boost inflation if it extends beyond initial expectations. In a baseline scenario, energy price increases would raise the consumer price index to 2.7% in May, from 2.4% in January. However, a more prolonged oil shock could push the headline CPI to 3% in May, remaining elevated throughout the year.
Despite the renewed fears of a prolonged conflict, UBS Global Wealth Management maintains a positive outlook on stocks. They expect minimal disruption to global energy supplies and believe President Trump's comments reinforce this view. UBS remains confident that U.S. equities will yield good gains this year, with their year-end S&P 500 price target set at 7,700, representing an 11% upside from the previous day's closing price.
In late Tuesday trading, several companies announced post-earnings moves. CrowdStrike Holdings' shares slipped 1% after beating fourth-quarter expectations but providing a disappointing outlook for the first quarter. Box, a content management provider, reported strong earnings and revenue for the fourth quarter, surpassing expectations, and saw its shares advance by over 2%. Conversely, GitLab's shares dipped 8% after the company's fiscal 2027 guidance fell short of analyst estimates. Ross Stores, an off-price retailer, beat Wall Street's quarterly expectations and increased its quarterly cash dividend by 10%.
As the week progresses, U.S. stock futures are opening lower, indicating a potential continuation of the market's recent volatility. The ongoing U.S.-Iran tensions and their impact on global markets will likely remain a key focus for traders and investors in the coming days.
