Iran Situation Triggers Oil Price Surge; U.S. Stock Futures Recover Slightly After Sharp Market Decline; PCE Data Set to Release

Investing.com - On Thursday evening, U.S. stock index futures rose slightly, recovering some ground after oil prices surged due to ongoing conflict in Iran and Wall Street suffered heavy losses.

Although it’s unlikely the Federal Reserve will take such action, President Donald Trump called for an immediate rate cut, providing some support to the market.

Focus now shifts to the upcoming release of the PCE Price Index data for more clues on inflation and the economy.

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As of 19:11 Eastern Time (08:11 Beijing Time the next day), the S&P 500 futures were up 0.2% at 6,690.50 points. Nasdaq 100 futures increased 0.1% to 24,587.25 points, and Dow futures rose 0.2% to 46,817.0 points.

In major after-hours trading, Adobe Systems (NASDAQ: ADBE) fell more than 7% after announcing that long-time CEO Shantanu Narayen will step down, overshadowing the company’s strong earnings performance.

Iran conflict pushes oil prices higher, sparking inflation concerns, Wall Street declines

On Thursday, Wall Street stocks declined sharply as investors re-evaluated inflation risks from high oil prices amid ongoing U.S.-Israel-Iran tensions with little sign of easing.

The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average fell between 1.5% and 1.8% amid broad sell-offs.

The decline followed a surge in oil prices after Iran announced it would continue blocking the Strait of Hormuz, a key shipping route for oil, with Brent crude rising back above $100 per barrel.

Markets worry that rising oil prices could lead to increased inflation in the coming months—potentially preventing the Fed from further rate cuts.

This outlook triggered a sharp sell-off in risk assets and rate-sensitive markets, with even gold, a traditional safe haven, losing support.

Trump calls for immediate Fed rate cut; awaiting PCE data

Earlier Thursday, Trump demanded the Federal Reserve “immediately” cut interest rates rather than wait until the next meeting.

He provided no reasons for his demand.

His call for a rate cut comes as confidence in the Fed’s recent rate decisions wanes, especially amid concerns over inflation from high energy prices.

The January PCE Price Index data will be released on Friday, offering more clues on the direction of rates. It is the Fed’s preferred inflation gauge.

While closely watched, this data is unlikely to reflect any energy-driven inflation caused by the Iran conflict.

CME FedWatch shows a 98.3% probability that the Fed will hold rates steady at next week’s meeting, with markets expecting the central bank to remain on hold at least until September.

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