BY COMFORT OGBONNA
Futures tied to major U.S. stock indexes dropped sharply on Thursday after U.S. President Donald Trump indicated that military strikes against Iran could intensify, dampening hopes for a swift end to the month-long conflict and pushing crude oil prices significantly higher.
In a closely watched address to the nation, Trump said American military operations in Iran would ramp up over the next two to three weeks. The comments contrasted with remarks he made earlier in the week suggesting that the United States could exit Iran relatively quickly, leaving investors uncertain about the scope and duration of the campaign.
The lack of a clear timeline or defined objectives has heightened market anxiety. Global markets experienced heavy volatility throughout March as investors tried to gauge how the conflict might affect economic growth, energy prices, and global financial stability.
The benchmark S&P 500 recorded its biggest monthly loss in a year during the turbulent period, while oil prices surged to record monthly gains. On Thursday, the benchmark Brent crude price climbed about 6%, trading near $107 per barrel as traders reacted to the prospect of continued supply disruptions.
Rising energy prices have fueled concerns that higher fuel costs could slow global economic growth while also pushing inflation higher. These developments have complicated the outlook for monetary policy from the Federal Reserve.
According to data compiled by LSEG, interest-rate futures now indicate that the Federal Reserve may keep borrowing costs unchanged for most of the year. Before the conflict escalated, investors had expected at least two interest-rate cuts of 25 basis points each.
At the height of market uncertainty last month, traders even priced in nearly a 50% probability that the central bank might raise interest rates rather than lower them if inflation pressures continue to intensify.
By early Thursday morning trading in the United States, futures markets were signaling sharp declines. Dow futures, tracked through Dow Jones Industrial Average E-minis, fell 551 points, or about 1.18%.
Futures tied to the S&P 500 dropped 86.75 points, or 1.31%, while Nasdaq-100 E-minis slid 379 points, or roughly 1.57%.
Small-cap stocks were also under pressure, with futures linked to the Russell 2000 falling nearly 2%. At the same time, market volatility increased as the CBOE Volatility Index—often referred to as Wall Street’s “fear gauge”—rose 2.1 points to 26.68.
The jump in volatility followed two sessions of risk-taking on Wall Street that had briefly pushed the VIX to its lowest level in more than a week as investors hoped the conflict might soon ease.
Instead, markets shifted back toward defensive positioning. Investors moved funds into the U.S. dollar, widely regarded as a safe-haven currency during periods of global uncertainty, while other traditional safe-haven assets such as precious metals experienced some selling pressure.
Beyond geopolitical tensions, investors are also closely watching developments in the space industry. Elon Musk’s rocket company SpaceX has confidentially filed for a U.S. initial public offering and is reportedly aiming for a valuation of around $1.75 trillion.
The news sparked renewed investor interest in the sector, lifting shares of smaller space companies during the previous trading session. Firms such as Rocket Lab, Planet Labs, and Intuitive Machines all saw gains on Wednesday as traders anticipated increased attention and investment flowing into the space industry.
Later in the day, investors will be paying close attention to remarks from Lorie Logan, whose comments may provide further clues about the central bank’s outlook for interest rates amid rising geopolitical uncertainty.
Market participants are also awaiting the weekly report on U.S. jobless claims, which will offer additional insight into the strength of the labor market ahead of the highly anticipated March employment report.
The monthly U.S. jobs data, commonly known as the nonfarm payrolls report, will be released on Friday. However, U.S. financial markets will be closed that day in observance of Good Friday, meaning investors may not fully react to the data until trading resumes the following week.
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