Market Update: Stock Futures and Oil Prices
As traders gear up for MDA Space Inc.’s launch on the New York Stock Exchange, stock futures ticked up slightly on Thursday evening, amidst anticipation of critical inflation data. This awaited report comes at a time when rising oil prices, spurred by ongoing tensions following the Iran war, are placing downward pressure on stock values.
Futures linked to the Dow Jones Industrial Average increased by 73 points, roughly 0.2%. Meanwhile, S&P 500 futures saw a modest rise of 0.1%, but Nasdaq 100 futures dipped by 0.05%.
In the previous trading session, stocks experienced significant losses, with the average of three major indices hitting their lowest closing prices of the year. The Dow fell nearly 740 points, closing below $47,000 for the first time this year, and the S&P 500 dropped by 1.5%.
The market faced heightened pressure as oil prices surged following remarks from Iran’s new supreme leader, Mojtaba Khamenei, who suggested that keeping the critical Strait of Hormuz closed could be used as leverage. Consequently, West Texas Intermediate Futures rose by 9.72%, settling at $95.73 per barrel. Similarly, Brent crude oil futures increased by 9.22%, closing above $100 for the first time since August 2022, at $100.46 per barrel.
These high oil prices, combined with various market challenges, are weighing heavily on investors. Chris Toomey, managing director at Morgan Stanley Private Wealth Management, mentioned on CNBC’s “Closing Bell” that the energy situation is a significant concern. He indicated that if the Strait of Hormuz remains closed for an extended period, it could signal serious issues ahead.
Furthermore, the soaring oil prices and intensifying inflation fears are dampening hopes that the U.S. Federal Reserve will reduce interest rates this year. Traders are anxiously anticipating the release of the January Personal Consumption Expenditure Price Index— the Fed’s favored inflation gauge— which is set to be published on Friday morning.
According to the Dow Jones Consensus, it’s expected that the headline PCE will rise by 0.3% month over month and 2.9% year over year. Core PCE, which excludes food and energy prices, is anticipated to see a month-on-month increase of 0.4% and a year-on-year rise of 3.1%.
The performance of the three major stock averages aligns with the overall trend of losses seen this week. The S&P 500 is down 1%, while the Dow has fallen by 1.7%. Since the week began, the Nasdaq has also experienced a decline of 0.3%.
