Stock futures are experiencing a flat trading session as traders closely monitor the latest developments in the U.S.-Iran conflict. The war has sparked concerns about the potential impact on the U.S. economy and future monetary policy decisions, leading to a volatile market.
On Tuesday, President Donald Trump announced that the U.S. will provide risk insurance to maritime trade through the Persian Gulf, aiming to ensure the safe passage of tankers through the Strait of Hormuz. This move comes in response to the Iranian Revolutionary Guard commander's threat to set fire to ships attempting the route. As a result, oil prices have surged, with Brent crude oil futures up 4.71% and West Texas Intermediate crude futures advancing 4.68%.
However, despite the immediate impact on oil prices, some analysts predict that the U.S.-Iran war could have a more significant effect on inflation. According to Goldman Sachs, if the conflict persists, it may push the inflation gauge, as measured by the consumer price index, to 3% in May, remaining elevated throughout the year. This could potentially challenge the Federal Reserve's target of 2%.
Despite the short-term volatility, UBS Global Wealth Management maintains a favorable stock outlook. They believe that the conflict will only cause minimal disruption to global energy supplies and that President Trump's comments reinforce this view. UBS expects U.S. equities to produce good gains this year, with their year-end S&P 500 price target of 7,700 remaining unchanged.
In late Tuesday trading, several companies' post-earnings moves have been notable. CrowdStrike Holdings' shares slipped 1% despite beating fourth-quarter expectations, while Box, a content management provider, advanced more than 2% after surpassing earnings and revenue forecasts. Conversely, GitLab's software stock dipped 8% due to lower-than-expected fiscal guidance, and Ross Stores' shares were up 6% after beating Wall Street's quarterly expectations and increasing their quarterly cash dividend.
As traders look ahead to Wednesday, the ADP private payrolls report will be closely watched, with expectations of 48,000 jobs added in February. Additionally, quarterly earnings results from Abercrombie & Fitch, Broadcom, and Okta will be scrutinized by investors.
