Stock Futures Drop as Iran Conflict Enters Fourth Week, Rate Cut Hopes Fade

U.S. stock futures declined Friday morning as the ongoing Iran conflict continues to disrupt energy markets and shake investor confidence. The prolonged crisis has led traders to push back expectations for Federal Reserve interest rate cuts, while oil prices surge past $110 per barrel.

Stock market futures fell during volatile Friday trading as the Iranian conflict neared its fourth week, creating turbulence in energy markets and causing investors to significantly adjust their expectations for Federal Reserve interest rate reductions.

Reports indicate the Trump administration is weighing options to occupy or impose a blockade on Iran’s Kharg Island as a strategy to force Iran into reopening the Strait of Hormuz.

Oil prices climbed higher, erasing previous declines that occurred after major European countries, Japan, and the United States suggested measures to increase energy supply. Brent crude prices jumped 1.7% to exceed $110 per barrel.

The CBOE volatility index, commonly known as Wall Street’s fear gauge, increased by 1.72 points to reach 25.78. Futures for the rate-sensitive Russell 2000 index dropped 1%.

Market participants found some reassurance in FedEx’s positive earnings report and outlook despite ongoing geopolitical tensions and rising fuel expenses, pushing the company’s shares up 10% in pre-market activity. Competitor United Parcel Service gained 1%.

FedEx, frequently viewed as an indicator of overall business conditions, reported that worldwide demand remained stable in early March despite the Iranian war, noting that fuel surcharges were protecting profits from escalating fuel expenses.

The week featured policy decisions from major international central banks that, alongside the Federal Reserve, recognized how the conflict has made monetary policy decisions more challenging. Although U.S. officials continue to plan for at least one quarter-point rate reduction this year, market participants remain skeptical.

Market traders have delayed their expectations for rate cuts to 2027, moving from December 2026 projections made earlier this month, based on LSEG data.

As of 6:06 a.m. ET, Dow E-minis declined 242 points or 0.52%, S&P 500 E-minis fell 39 points or 0.59%, and Nasdaq 100 E-minis dropped 200.5 points or 0.82%.

The benchmark S&P 500 and blue-chip Dow were heading toward their fourth consecutive weekly decline, though a moderate recovery in artificial intelligence stocks like Advanced Micro Devices and Micron helped limit losses on the Nasdaq.

All three major indices also fell beneath their 200-day moving averages, a technical measure showing long-term trends, while the small-cap Russell 2000 index temporarily recorded a 10% decline from record highs earlier in the week.

Super Micro Computer plummeted 23% following charges against three individuals connected to the AI server company for allegedly helping smuggle at least $2.5 billion worth of U.S. artificial intelligence technology to China, violating export regulations.

Energy sector stocks have shown strong performance, with the S&P 500 energy index positioned for its thirteenth consecutive week of increases as geopolitical developments in Venezuela and the Middle East dominated the first quarter.

Energy companies including Halliburton and Cheniere Energy rose 1% and 3% respectively.

Tegna surged 9.4% after the Federal Communications Commission announced approval of the $3.54 billion acquisition of the local television station operator by Nexstar.