Decline in US Stock Indexes Supported by Middle East Tensions and Potential US Intervention
Futures contracts for US indexes witnessed a significant decline during the night of Thursday, June 19, amid escalating fears of escalation between Israel and Iran and the possibility of direct US military intervention.
Futures for the Dow Jones Industrial Average fell by about 221 points (0.5%), while contracts for Nasdaq Composite dropped 0.6%, and S&P 500 by 0.4%, despite US markets being closed on Thursday due to a federal holiday.
Investors continue to closely monitor the rapid developments between Iran and Israel, especially after the White House announced that President Donald Trump is considering a military strike on Tehran, with an expected final decision within the next two weeks. Trump had previously called on Iran to "unconditionally surrender," a statement described by Iranian Supreme Leader Ali Khamenei as "threatening and ridiculous."
Oil markets reflected this tension, as Brent crude and US oil rose by 3% on Thursday, supported by statements about possible Israeli strikes against "strategic and governmental targets" in Iran.
Jeff Buchbinder, Chief Equity Strategist at LPL Financial, pointed out that there are "several key questions that need to be answered before knowing how stocks will deal with this shock, including the extent of damage to Iran's energy infrastructure, the fate of the Iranian nuclear program, and the future of the ruling regime."
This escalation comes at a time when investors are still evaluating statements from Federal Reserve Chairman Jerome Powell, who confirmed on Wednesday that the central bank is "not in a hurry" to cut interest rates and will base its decision on data, especially with the unclear impact of tariffs imposed by Trump. In response, Trump criticized Powell on Thursday, saying he is "costing the United States hundreds of billions of dollars" by delaying interest rate cuts.
Despite the fluctuations, indexes have shown mixed performance since the beginning of the week, with S&P 500 slightly rising by 0.07%, while Dow Jones declining by 0.06%, and Nasdaq rising by about 1%. The market remains sensitive to any geopolitical or economic developments, with focus on potential US actions in the Middle East and monetary policy decisions.
