(Sharecast News) - Wall Street futures pointed to a cautiously higher open ahead of the bell on Wednesday as major indices look set to try recover from a volatile previous session.
As of 1245 GMT, Dow Jones futures were up 0.07%, while S&P 500 and Nasdaq-100 futures were 0.17% and 0.26% higher, respectively.
The Dow closed 403.51 points lower on Tuesday, although far off its session lows, amid the ongoing conflict between the US and Iran.
Futures were slightly higher early on Wednesday as geopolitical tensions in the Middle East eased slightly after Donald Trump said the US would provide risk insurance for all maritime trade through the Persian Gulf, a move aimed at getting tanker traffic moving through the Strait of Hormuz after the Iranian Revolutionary Guard threatened to block the route.
Trump's intervention comes as Israel launched another round of strikes on Tehran, with its defence minister vowing to "crush" Iran's capabilities, keeping markets on alert even as energy prices steadied. Brent crude pared earlier gains to trade up around 1.4% on Wednesday morning, while West Texas Intermediate rose roughly 0.9%.
Sentiment was also given a modest lift after reports suggested Iran had quietly reached out to the CIA through a third‑country intelligence service to explore possible terms for ending the conflict, despite Tehran's public refusal to negotiate. The New York Times said the approach came a day after US and Israeli strikes began, with the emergence of a potential back‑channel, however fragile it may be, helping to buoy risk appetite, as investors weighed whether any diplomatic opening could slow an escalation that has left Iran's leadership in turmoil as senior figures continue to be targeted by Israeli strikes.
Trade Nation's David Morrison said: "This week's jump in energy prices has stoked inflation fears. Even before the renewed US-Israeli attack on Iran this weekend, several Fed officials expressed their concerns over rising inflation. Some even suggested that the Fed's next monetary policy move should be a hike, rather than a cut. The yield on the US ten-year Treasury crept up another couple of basis points to 4.08% having fallen to 3.92% briefly on Monday. The CME's FedWatch Tool suggests that there may still be 50 basis points-worth of rate cuts this year, but now expect the first 25 bps in September, or July at the earliest, rather than June."
Market participants will be zeroed in on February's ADP private payrolls report on Wednesday, due out at 1315 GMT, with economists expecting to see 48,000 jobs added last month, up from 22,000 in January.
Elsewhere on the macro front, US mortgage demand picked up last week as borrowing costs hovered near a four‑year low, according to the Mortgage Bankers Association, with total applications rising 11% from the previous week. Applications to refinance a mortgage jumped 14.3% and were up 109% on the year, reflecting a sharp drop in rates as the average contract rate for 30‑year fixed mortgages with conforming balances held at 6.09%, the lowest since 2022. Applications to purchase a home rose 6.1% for the week and 10% for the year.
Still to come, S&P Global's February services and composite PMIs will be published at 1445 GMT, while the Institute of Supply Management's services PMI was slated for release at 1500 GMT.
In the corporate space, Abercrombie & Fitch was slated to report before the open, while Broadcom will release its latest batch of quarterly earnings after the close.
Reporting by Iain Gilbert at Sharecast.com