U.S. stock futures took a significant hit early Friday morning following Israel’s airstrike on Iran, with futures linked to the Dow Jones Industrial Average plummeting 593 points, or 1.38%. The S&P 500 futures saw a decline of approximately 1.55%, while Nasdaq 100 futures dropped 1.73%.
The sell-off came after Israel’s Defense Minister, Israel Katz, declared a special state of emergency in light of the attack. Two U.S. officials clarified, as reported by NBC News, that there would be no American involvement or support in this conflict. Consequently, Brent crude prices spiked over 7%, and West Texas Intermediate crude futures also experienced a 7% rise.
Earlier in the week, the stock market had shown signs of recovery; both the Dow and Nasdaq Composite had gained 0.2%, and the S&P 500 had risen nearly 0.4%, inching closer to its all-time high set in February, less than 2% away from that benchmark. The increase in the May producer price index, which rose by 0.1% from the previous month, contributed to this upward momentum, although it fell short of the 0.2% increase anticipated by economists surveyed by Dow Jones. Additionally, bond yields decreased, fostering a more positive investor sentiment, aided by a cooler-than-expected consumer inflation report.
However, trepidations regarding the White House’s tariff policy have tempered market gains. Treasury Secretary Scott Bessent hinted on Wednesday that the Trump administration might extend the current 90-day tariff suspension beyond the July 9 deadline, provided major trading partners demonstrate ‘good faith’ in negotiations. In contrast, President Donald Trump expressed concerns about imposing unilateral tariffs, stating to reporters, “We’re dealing with Japan, we’re dealing with South Korea. We’re dealing with a lot of them. So we’re going to be sending letters out, in about a week and a half, two weeks, to countries, telling them what the deal is, like I did with EU.”
Despite these challenges, the stock market is on track for solid weekly gains, with the S&P 500 up nearly 0.8%, the Nasdaq Composite poised for a 0.7% increase, and the Dow projected to rise by 0.5%. All three indices are gearing up for their third consecutive week of positive performance. Investors are now looking forward to the preliminary June reading of the University of Michigan’s consumer sentiment report for additional insights into the economic landscape.