U.S. stock futures slipped on Thursday as a new wave of strikes on energy infrastructure in the Middle East triggered a pronounced surge in oil and gas prices, renewing worries about inflation and the knock-on effects for markets and borrowing costs. The Federal Reserve held policy steady and left the door open to a future cut, but its chair cautioned market participants against reading too much into the projections. Meanwhile, Micron Technology reported robust quarterly earnings and revenue growth but saw its shares fall in premarket trading after disclosing significantly higher planned factory spending for fiscal 2026.
Futures fall after fresh energy strikes
By 04:16 ET (08:16 GMT) on Thursday, futures tied to the major U.S. benchmarks were moving lower. The Dow futures contract was down 38 points, or 0.15%, S&P 500 futures had eased by about 11 points, or 0.2%, and Nasdaq 100 futures were lower by roughly 67 points, or 0.3%.
The pullback in futures followed a sharp decline in cash markets during the prior trading session, when the blue-chip Dow Jones Industrial Average closed lower by 1.6%, the S&P 500 fell 1.4%, and the Nasdaq Composite dropped 1.5%. The earlier losses came amid reports of a strike on the South Pars oil field - the Iranian section of what is described as the world's largest oil deposit - and subsequent Iranian strikes on gas facilities in Qatar and Saudi Arabia. Those developments raised concern that escalating hostilities between Iran and the combined forces of the U.S. and Israel could broaden into a wider regional conflict.
Investors were also digesting hotter-than-expected U.S. producer price inflation for February, data that suggested inflationary pressures were present in the U.S. before the recent Middle East disruptions. With energy markets now under renewed strain, traders and policymakers alike were watching central bank decisions closely for signals about how officials expect prices - and therefore borrowing costs - to evolve.
Oil and gas prices spike, amplifying inflation fears
Brent crude futures, the global benchmark, climbed sharply, trading well above the $112-a-barrel mark. By 04:40 ET, Brent had risen about 7.8% to $115.78 per barrel, an increase of roughly $8 on the session. U.S. West Texas Intermediate (WTI) futures also rose, trading at $97.01 per barrel, up about 1.6%. The spread between Brent and WTI widened to its largest in more than a decade, a divergence attributed in part to the release of U.S. strategic petroleum reserves.
European natural gas prices reacted even more violently. After strikes reportedly hit Ras Laffan in Qatar - the world's largest liquefied natural gas production site, which alone supplies as much as one-fifth of global LNG - European gas jumped by more than 25%. That single production hub is a material source of global LNG and the attack on its facilities prompted an acute tightening of global gas supply expectations.
Analysts at ING described the decision to target Iranian energy assets as an unusual move, noting it runs counter to efforts by the U.S. administration in recent weeks to blunt upward pressure on oil prices. Political statements about responsibility for the strikes have been disputed in public remarks: President Donald Trump denied U.S. or Qatari involvement and instead said Israel carried out the South Pars attack.
The attacks add to existing disruptions in one of the world's most sensitive maritime corridors. The Strait of Hormuz, south of Iran, is a critical transit point for roughly 20% of global oil shipments, but heightened security concerns have substantially limited vessel transits and effectively tightened available seaborne flows.
With the conflict entering its third week, there were few signs of de-escalation. White House deliberations included consideration of deploying thousands of U.S. troops to reinforce operations in the region, according to reporting cited by market sources.
Fed decision leaves cuts possible but uncertain
On Wednesday, the Federal Reserve chose to keep its policy rate target unchanged at a range of 3.5% to 3.75% - a widely anticipated decision. The Fed's quarterly projections, however, continued to show a number of policymakers penciling in at least one reduction in rates later in 2026: 12 of the 19 participants included at least one cut in their forecasts, consistent with their December outlook.
Speaking at the post-decision press conference, Fed Chair Jerome Powell cautioned that market participants should treat those projections with extra skepticism. He suggested that current policy rates sit at a level that neither materially supports growth nor significantly restricts it - a characterization that implies limited room for rate reductions, particularly if energy-driven inflation accelerates.
In essence, the Fed maintained a posture that preserves optionality: leaving rates steady for now while acknowledging the possibility of easing later in the year, but warning that projections are not guaranteed and that incoming data will determine the path forward.
Global central banks also pause amid uncertain energy outlook
Other major central banks likewise opted to stand pat on rates, signaling a common short-term response to the uncertain inflationary environment created by the energy price surge. The Bank of Japan left its overnight call rate unchanged at 0.75% in a near-unanimous 9-member board decision; only BOJ member Hajime Takata dissented, calling instead for a 25 basis-point hike because of upside risks to inflation.
The BOJ warned explicitly that rising energy prices pose risks to medium-to-long-term inflation outcomes and noted that developments in the Middle East and crude markets were economic risks to monitor. Analysts at Capital Economics observed that the BOJ also signaled a readiness to raise rates again should stronger inflation persist.
Markets were preparing for policy announcements from the European Central Bank and the Bank of England during the same session, expecting both to hold rates steady while offering commentary on how the Iran conflict might feed through into European price levels and growth. The Swiss National Bank similarly left interest rates unchanged but highlighted that the economic outlook had become more uncertain amid the conflict.
Micron posts blockbuster quarter but flags heavier capex
Micron Technology reported a standout fiscal second quarter, with adjusted earnings per share of $12.20 for the period ended Feb. 26, up from $1.56 a year earlier and beating the analyst consensus of $8.79. Revenue for the quarter rose 196% year-on-year to $23.86 billion from $8.05 billion a year earlier, exceeding estimates of $19.19 billion. The company also reported a record gross margin of 74.9%, an 18-percentage-point increase sequentially.
Despite those outsized results, Micron's stock moved lower in premarket trading, dropping more than 4%. The share reaction followed the company’s guidance for capital spending in fiscal 2026: Micron said it expects to invest more than $25 billion on new manufacturing facilities - roughly $5 billion above previous forecasts. Chief Executive Sanjay Mehrotra framed the investment as a response to growing customer demand for memory in the era of artificial intelligence and described memory as a strategic asset for Micron's customers.
The company’s emphasis on expanding its global manufacturing footprint signals a near-term increase in capital intensity for the firm and the broader memory sector, even as robust revenue and profit metrics for the reporting quarter reflected strong demand conditions.
Implications across markets and sectors
The immediate market reaction underscores the sensitivity of equities to energy-driven inflation risks. Higher oil and gas prices can lift input costs across numerous sectors and complicate central-bank policy decisions by increasing the likelihood that price pressures persist. Energy producers and suppliers may benefit from rising prices, while sectors with substantial energy input costs - such as transportation, manufacturing, and certain real estate segments that are energy-intensive - could see margins squeezed.
For financial markets, the tension is evident: policymakers are balancing stronger inflation signals against economic resilience, while corporate issuers like Micron weigh hefty investment plans against the backdrop of higher borrowing costs and broader market volatility. The path of central bank communications and the evolution of the Middle East conflict will likely remain the key drivers for both risk assets and rates in the near term.
Key takeaways
- Attacks on energy infrastructure in the Middle East sent Brent above $112 per barrel and pushed European gas prices up more than 25% after strikes hit a major LNG complex.
- The Fed left rates at 3.5% to 3.75% and kept the possibility of cuts later this year in its projections, but Chair Powell warned markets to treat forecasts cautiously.
- Micron reported dramatic year-on-year revenue and EPS gains, but flagged over $25 billion in planned capex for fiscal 2026, prompting a premarket share decline.
Risks and uncertainties
- Escalation of the Iran-related conflict - The ongoing hostilities, now entering their third week, could further disrupt oil and LNG supplies and amplify global inflationary pressures, affecting sectors dependent on energy inputs.
- Inflation persistence - Hotter-than-expected U.S. producer price inflation and a fresh spike in energy costs increase the risk that price pressures remain elevated, complicating central bank decisions and potentially limiting room for rate reductions.
- Policy and market reaction - Central banks' responses to higher energy prices and inflation could differ over time; inconsistent guidance or surprise policy shifts would add volatility to rates and risk assets.
Markets will be watching subsequent central bank communications and any further developments in the Middle East closely, as these factors will influence the outlook for inflation, interest rates, and corporate investment plans. Micron's results highlight the tension companies face between meeting demand and increasing capital commitments amid a potentially more volatile macroeconomic backdrop.