Iran and Israel clash over ceasefire in Lebanon
Israeli Prime Minister Benjamin Netanyahu said the ceasefire between Israel and Iran does not include Hezbollah.
April 9 (Reuters) – U.S. stock futures edged lower on Thursday after the index rebounded in pre-trade as cracks appeared in the fragile Middle East cease-fire, but investors shifted their focus to domestic inflation trends later in the day.
A day after fighting continued despite Tuesday’s cease-fire, US President Donald Trump vowed to keep military assets in the Middle East until a peace deal is reached with Iran and warned of a major escalation if it did not comply.
Uncertainty over energy flows through the Strait of Hormuz led to a rebound in oil prices, which remained below $100 a barrel. U.S. energy stocks rose slightly in premarket trading.
On Wednesday, the S&P 500 and Nasdaq posted their biggest gains in a week, and the Dow posted its biggest gain in a year as global markets celebrated a two-week truce.
“While the peak of the crisis is likely over and the market seems to think so, it may still be too early to aggressively escalate risks,” analysts at BCA Research said.
“Volcanic headlines and shifting rhetoric…The course of Hormuz will determine whether the ceasefire really works. Even if heavy attacks continue, risk assets could still rise if Hormuz shows reliable signs of reopening.”
As of 4:55 a.m. ET, the Dow E-mini YMcv1 was down 187 points, or 0.39%, the S&P 500 E-mini EScv1 was down 27.25 points, or 0.40%, and the Nasdaq 100 E-mini NQcv1 was down 95.25 points, or 0.38%.
On Thursday, investors will analyze February personal consumption spending numbers, the Federal Reserve’s preferred measure of inflation.
Economists polled by Reuters forecast that the PCE index will remain at 2.8%, unchanged from January.
Friday’s release of the consumer price index for March will be closely watched as investors wait to see how the conflict-induced rise in oil prices will affect the economy.
The final outlook for economic growth in the fourth quarter will also be closely watched.
Financial market participants are pricing in only about a 30% chance of a 25 basis point rate cut by the end of 2026, compared with 56% a day earlier, according to data compiled by LSEG.
Before the outbreak of war, we expected two rate cuts this year, but during the conflict, expectations for a rate hike in December had increased.
Minutes from the central bank’s March meeting showed last month that more policymakers believe interest rates may need to be raised to combat inflation, which continues to exceed the central bank’s 2% target, especially after war-induced price increases.
Among the premarket gainers, Applied Digital APLD.O shares fell 6.7% after the data center operator’s third-quarter net loss widened from a year earlier.
(Reporting by Purvi Agarwal and Sruthi Shankar in Bengaluru; Editing by Shingini Ganguli)
