Key Takeaways:
U.S. stock futures rose Thursday as crude prices edged lower, giving investors room to look past escalating Middle East tensions and Oracle Corp.'s post-earnings slide.
S&P 500 futures gained 0.7% as oil prices retreated from multi-month highs, easing concern that rising energy costs would compound inflationary pressures. Nasdaq 100 futures added 1.1%, while Dow Jones Industrial Average futures rose 0.6%.
"The pullback in crude is providing some relief after Monday's spike, but the geopolitical risk premium remains embedded in prices," said Victoria Fernandez, chief market strategist at Crossmark Global Investments. "We're seeing a rotation out of tech into areas that have been beaten down — pharma, healthcare, financials, energy."
The pre-market gains follow a turbulent week. The S&P 500 fell 1.6% on Wednesday and the Nasdaq Composite dropped 2%, extending losses from a 4.2% rout the previous Friday that was triggered by Broadcom Corp.'s disappointing revenue and a broad selloff in AI-linked stocks. South Korea's Kospi crashed 8.3% on Monday, while Japan's Nikkei 225 lost 3.9%, as the tech rout cascaded across Asia.
Oracle slid more than 11% in extended trading after the software company announced plans to raise $20 billion in equity and debt to fund its artificial intelligence infrastructure buildout, a move that weighed on S&P 500 futures and the iShares Expanded Tech-Software Sector ETF. The decline added to pressure on a tech sector already reeling from last week's selloff.
The geopolitical backdrop remains fluid. The U.S. completed what it described as "self-defense strikes" against Iran, though Gulf countries reported continued hostile activity from Tehran. Brent crude had surged 4.3% to $97 a barrel on Monday after Israel struck a petrochemical plant in southwestern Iran and Iran fired missiles at Israel, jeopardizing a fragile ceasefire. By Thursday morning, oil had edged lower as traders assessed the risk of further escalation.
Traders are now turning their attention to the May producer price index, due at 8:30 a.m. ET. Economists expect headline PPI to have risen 0.7% month over month, a sharp deceleration from the 1.4% increase in April. Core inflation, excluding food and energy, is forecast at 0.5%, down from 1% the prior month. A softer reading could reinforce expectations that the Federal Reserve will hold rates steady at its next meeting, while a hot print would revive concerns that inflation remains stubbornly elevated.
Initial jobless claims for the week ended June 6 are also due Thursday morning, providing another data point on the labor market's trajectory.
The Cboe Volatility Index, which spiked above 28 during Monday's selloff, has moderated but remains elevated relative to its trailing one-year average, reflecting lingering uncertainty over both geopolitics and the inflation outlook.
This article is for informational purposes only and does not constitute investment advice.
