Major U.S. index futures point to a lower open on Thursday, with equities set to give back territory after a strong gain. Traders may capitalize on Wednesday’s high gains on fears over the Middle East ceasefire’s fragility, with Iran accusing the U.S. and Israel of breaking it. Iranian deputy foreign minister Saeed Khatibzadeh told that Iran had closed the Strait of Hormuz again. Khatibzadeh called Israeli attacks on Lebanon earlier in the day a “intentional grave violation” of the ceasefire. After falling more than 16% on Wednesday, U.S. crude oil futures rose more than 5% in response to the news. “There is an air of renewed nervousness pervading financial markets after the euphoria which was initially prompted by the US-Iran ceasefire,” said Dan Coatsworth. He added, “This agreement already seems to be fraying at the edges – with continued Israeli strikes on Lebanon a key sticking point. With talks on a lasting deal yet to begin, investors are understandably cautious.”
Late Wednesday, President Donald Trump posted on Truth Social that U.S. soldiers will stay in the region until Iran reaches a “real agreement” and “fully complies.” At the opening of trade on Wednesday, stocks rose strongly and performed well throughout. The rally sent the major averages to their greatest closing levels in a month. After Tuesday’s uneven trading, the main averages all rose significantly. The Dow rose 1,325.46 points (2.9%) to 47,909.92, the Nasdaq 617.15 points (2.8%) to 22,635.00, and the S&P 500 165.96 points (2.5%) to 6,782.81. Wall Street initially surged when the U.S., Israel, and Iran agreed to a two-week ceasefire. President Donald Trump announced Tuesday evening on Truth Social that he will suspend bombing and attacking Iran for two weeks if Tehran opens the Strait of Hormuz completely, immediately, and safely.
Trump said Iran’s 10-point proposal is a “workable basis on which to negotiate” and that the two-week ceasefire will help conclude the agreement. If attacks against Iran stop, Iran’s Foreign Minister Abbas Araghchi said the Strait of Hormuz will reopen for two weeks. The revelation has caused a significant decline in crude oil prices, with U.S. futures falling by almost 15% and falling below $100 per barrel. According to Dan Coatsworth, the favorable market reaction is justified as a two-week truce offers optimism for a complete crisis resolution. He noted that the truce allows the world to breathe and assess events. “Unfortunately, there is no guarantee that everything will return to normal.”
On the day, airline stocks performed well, with the NYSE Arca Airline Index rising 7.3 percent to its biggest closing level in a month. The Philadelphia Semiconductor Index rose 6.3 percent, indicating semiconductor stock growth. Networking stocks rose 5.3 percent, lifting the NYSE Arca Networking Index. Housing, computer gear, and financial equities also rose, while oil and gas companies fell.