April 23 (Reuters) – Wall Street futures slipped early on Thursday, with investors hesitant to extend the recent equities rally in the absence of clearer signals on the U.S.-Iran war.
Iran seized two ships in the Strait of Hormuz and demanded that the U.S. lift its naval blockade, which remains in effect even after President Donald Trump extended the ceasefire indefinitely.
Investors keen to look past war-related risks have shown strong resilience in recent days, but some fatigue has set in, leading to brief episodes of risk aversion as they await a clearer sense of how the conflict may ultimately be resolved.
With oil prices over $100 a barrel, the risk of an inflation flare-up also remains.
“Even in the event that the Middle East conflict eases and shipping resumes as usual through the Strait of Hormuz, it would likely take time for the global economy to normalize after one of the largest oil supply disruptions in decades,” said PIMCO economist Tiffany Wilding.
At 4:56 a.m. ET, Dow E-minis fell 289 points, or 0.58%, S&P 500 E-minis slipped 37.5 points, or 0.52%, and Nasdaq 100 E-minis were down 153.5 points, or 0.57%.
PACKED EARNINGS CALENDAR IN FOCUS
The earnings season has been largely strong so far, but because the results reflect only one month of disruption from the Middle East conflict, investors are questioning how dependable they are as a gauge of what lies ahead.
Tesla shares fell 2.9% in the premarket session, after it raised its spending plan to more than $25 billion for the year.
The company is in the middle of one of the most expensive bets in its history as CEO Elon Musk channels funds into artificial intelligence, robotics and chips.
“With all the focus on the war, a forgotten theme that weighed on the market at the start of the year is artificial intelligence overinvestment and diminishing future returns,” said Kyle Rodda, senior financial market analyst for Capital.com.
IBM fell 7.3% after revenue growth slowed in the first quarter on weakness in its software business. Texas Instruments rose 10.3% after forecasting second-quarter revenue and profit above Wall Street expectations.
Honeywell was up marginally ahead of results, while chemicals maker Dow fell 2.8%.
American Airlines, American Express and Comcast are among the other companies due to report on Thursday amid a crowded earnings slate.
U.S. weekly initial jobless claims and manufacturing activity data scheduled to be released later on Thursday will also be scrutinized for clues on the impact of higher energy prices due to the war.
(Reporting by Niket Nishant in Bengaluru; Editing by Devika Syamnath)
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