U.S. equity futures were trading lower on Wednesday following volatile moves in the prior session as investors tracked escalation in the Middle East that has the potential to interrupt critical oil and gas shipping lanes. By 02:58 ET (07:58 GMT), contracts tied to the main U.S. indices were modestly down: the Dow futures contract was lower by 109 points, or 0.2%; S&P 500 futures had fallen by 15 points, or 0.2%; and Nasdaq 100 futures had eased by 91 points, or 0.4%.
Those pre-market declines followed a turbulent trading day on Tuesday when the broad averages on Wall Street ultimately finished lower despite a partial rebound from a deeper morning selloff. A sharp rise in U.S. Treasury yields contributed to the volatility, with investors pricing in the risk that a pronounced jump in oil could lift inflation and push back planned Federal Reserve rate cuts. "While other government bond yields have shown similar patterns, the effect is particularly strong in the U.S. where a greater number of cuts had been priced in," Bradley Saunders, North America Economist at Capital Economics, said.
The confrontation between Iran and the combined forces of the U.S. and Israel entered a fifth day, with Iranian missile strikes reported against U.S. bases across the Middle East and at least some Gulf states. A senior U.S. military commander commented that the campaign against Tehran is ahead of the "game plan," yet market participants remain concerned that the bombardments could escalate into a prolonged and indeterminate regional war. Alongside the geopolitical shock, investors were also watching renewed private credit fears after a marked uptick in withdrawals from Blackstone's flagship private credit fund.
Energy markets react - oil, gas and diesel
A central market worry is the prospect of sustained disruptions to tanker traffic through the Strait of Hormuz, the narrow waterway off Iran's southern coast through which a significant share of the world’s oil and gas supplies transit. Brent crude, which was trading near $73 a barrel before the start of the assault on Iran, has moved to roughly $83 per barrel in recent sessions. The Brent futures contract was last trading at $83.48 a barrel, up 2.6%, while U.S. West Texas Intermediate crude futures rose 2.5% to $76.41 a barrel.
On Tuesday, oil prices initially surged as much as 8% before giving back a sizable portion of those gains after President Donald Trump suggested the U.S. might begin escorting ships through the Strait of Hormuz.
Natural gas prices have also climbed steeply in Europe and Asia, reflecting mounting concerns about supply after reports that Iranian attacks on a Qatari natural gas site halted flows from a major producer. Those disruptions have restricted shipments to several countries that depend on Qatari exports. At the same time, diesel prices have risen, which could exert upward pressure on transportation costs - a component closely watched in inflation readings.
Energy-related anxiety hit regional equity markets in Asia particularly hard. Countries such as South Korea and Japan, which rely heavily on imported oil and gas that moves through the Strait of Hormuz, faced sharp selling. South Korea’s Kospi index fell enough that trading was temporarily suspended during the session.
Gold recovers after recent selloff
After dramatic swings in recent trading, gold regained some ground on Wednesday. Spot gold rose by 1.7% to $5,176.75 after having dropped nearly 5% in the previous session. Gold futures also climbed, up 1.3%.
Although gold is conventionally seen as a safe-haven asset during periods of geopolitical stress and higher inflation, its appeal had been undercut when the U.S. dollar strengthened. The U.S. Dollar Index traded broadly flat on Wednesday after jumping nearly 1.5% over the prior two days, a move that had earlier weighed on dollar-priced bullion and contributed to the prior slide in gold.
Corporate news: CrowdStrike posts solid quarter
On the corporate front, cybersecurity firm CrowdStrike reported fourth-quarter results that beat Wall Street estimates and issued annual guidance that was largely in-line for fiscal 2027. The Austin, Texas-based company posted Q4 earnings of $1.12 per share, topping analyst estimates of $1.10, and reported revenue of $1.31 billion, narrowly ahead of the $1.30 billion consensus.
Executives at the company said that broader enterprise adoption of artificial intelligence is creating incremental demand for security tools, positioning CrowdStrike to expand as firms seek to secure AI workloads and data. Despite the better-than-expected results, the stock was slightly lower in extended trading on Wednesday.
Reports of OpenAI exploring NATO contract
Several media reports on Tuesday indicated that OpenAI is considering a contract with the North Atlantic Treaty Organization. Initial reporting suggested comments by OpenAI CEO Sam Altman about a possible deployment on NATO classified networks; subsequent clarifications said Altman misspoke and that the contract under consideration would be for unclassified networks. Separately, Reuters reported that OpenAI is weighing a deal to deploy its AI technology on NATO’s unclassified networks.
These developments follow a recent announcement that OpenAI will deploy its technology on the U.S. Defense Department’s classified network. That Pentagon agreement came after the defense department designated rival Anthropic as a "supply-chain risk," removing the company from that program. Anthropic’s removal was tied to the company’s refusal to allow its AI models to be used for domestic mass surveillance or to power fully autonomous lethal weapons.
Market implications and investor focus
Across asset classes, market participants are weighing the potential for a prolonged regional conflict to disrupt energy flows and lift inflation, which in turn could affect the timing and extent of Federal Reserve policy easing. The combination of rising yields, surging energy prices and geopolitical uncertainty has prompted whipsaw moves in equities, commodities and fixed income.
Private credit markets were also under scrutiny after reports of increased withdrawals from Blackstone’s flagship private credit fund, adding a separate layer of concern around liquidity and investor confidence in non-bank lending vehicles.
What to watch next
- Further developments in the Iran-U.S.-Israel exchanges and any escalation or de-escalation in missile strikes across the region.
- Oil and natural gas shipment activity through the Strait of Hormuz and any official steps to protect tanker traffic, including escort proposals.
- Movements in U.S. Treasury yields, which have been sensitive to expectations for inflation and Federal Reserve rate cuts.
- Updates on private credit fund flows, particularly any additional withdrawals from large flagship funds.
- Additional corporate announcements on AI deployments and security contracts, including any formal agreements involving OpenAI and NATO or further Pentagon-related developments.