U.S. stock futures witnessed a downward trend after Israel launched a retaliatory strike against Iran, heightening tensions in the Middle East.
Dow Jones Industrial Average futures experienced a loss of 69 points, equivalent to 0.2%. Similarly, futures for the S&P 500 and the Nasdaq 100 retreated by 0.2% and 0.3% respectively. Thursday saw declines in both the S&P and Nasdaq indices, setting the stage for a potential third consecutive weekly drop in stocks.
Reports from The Wall Street Journal indicated that Israel targeted sites in central Iran, including a drone factory. Although there has been no official confirmation of the incident, U.S. officials have reportedly confirmed the strike, according to CNN.
The retaliatory action follows Iran’s drone attack on Israel last weekend, raising concerns among investors and potentially prompting a shift towards safe-haven assets away from higher-risk stocks.
Deutsche Bank analyst Henry Allen noted, “Markets are reacting to new developments in the Middle East,” highlighting fears of further escalation in the conflict, especially given Iran’s vow to respond to any attacks.
In response to the uncertainty, prices of U.S. government bonds, considered traditional safe-haven assets, saw an increase, causing yields to decline. The yield on the 10-year Treasury bond slipped to 4.596%, albeit remaining higher than the levels observed at the beginning of the year. This reflects expectations of sustained higher interest rates compared to earlier projections. The 2-year yield, which briefly touched 5% on Thursday, also decreased, trading at 4.971%.
