Dow Jones futures declined by 0.39% to below 46,550 during European trading hours on Thursday, with S&P 500 and Nasdaq 100 futures also falling 0.40% and 0.44% to near 6,610 and 24,250, respectively [1]. The drop in US stock futures reflects cautious market sentiment as hopes for a resolution to the Middle East conflict diminish. Iran reportedly rejected the United States’ 15-point proposal to end the war, instead presenting five conditions including guaranteed compensation for war damages and sovereign control over the Strait of Hormuz [1]. Meanwhile, the Israeli Defense Forces (IDF) announced on X that it had conducted a series of strikes on Isfahan in central Iran, signaling further escalation in the region [1].
TD Securities strategists Oscar Munoz and Eli Nir commented that the Federal Reserve is facing mixed signals due to the conflict-driven oil shock, which complicates the economic outlook. They noted that the US economy remains uneven, with inflation and growth dynamics pulling policy in different directions. As a result, they expect the Fed to remain on hold in the near term, but leave room for potential rate cuts later in 2026 if conditions evolve favorably [1].
Despite the geopolitical tensions, US equities ended higher on Wednesday, with the Dow Jones rising 0.66%, the S&P 500 gaining 0.54%, and the Nasdaq 100 advancing 0.77%, supported by a pullback in oil prices [1]. Investors are now focusing on upcoming weekly Initial Jobless Claims and speeches from several Fed officials, which could provide further direction for the markets [1].
CONCLUSION
Escalating tensions in the Middle East and Iran's rejection of US peace proposals have weighed on US stock futures, though recent gains in equities were supported by lower oil prices. The Federal Reserve is expected to remain cautious, with strategists anticipating no immediate rate changes. Investors are closely watching economic data and Fed commentary for further market cues.