(Sharecast News) - Wall Street futures were firmly in the red ahead of the openning bell on Tuesday as renewed spikes in energy prices reignited concerns that the US-Iran conflict could prove more prolonged than markets had anticipated.
As of 1245 GMT, Dow Jones futures were down 1.70%, while S&P 500 and Nasdaq-100 futures had the indices opening 1.58% and 1.99% weaker, respectively.
The Dow closed 73.14 points lower on Monday as the escalating conflict in the Middle East limited upside on Wall Street after oil prices surged to eight-month highs.
Equities staged a strong rebound on Monday as oil prices eased into the close, but crude and gas markets moved sharply higher again overnight as the conflict broadened. Brent crude surged 8% to above $84 a barrel, following a 6% jump on Monday, while West Texas Intermediate climbed 8% to more than $77 after a similar rise in the previous session.
The oil price moves came after an Iranian Revolutionary Guard commander declared the Strait of Hormuz closed, warning that ships attempting to pass through the key oil transit route would be targeted, according to Reuters.
Signs of the conflict widening also continued to emerge as the confrontation entered its fourth day, with the US embassy in Riyadh hit by drones as Iran stepped up attacks on Saudi Arabia, prompting the State Department to order evacuations from Bahrain, Iraq and Jordan.
Hezbollah launched missiles and drones at Tel Aviv, while questions grew over how long Gulf states such as the UAE could withstand sustained missile and drone barrages as Donald Trump warned the conflict could last more than four weeks.
The renewed surge in energy prices pushed Treasury yields higher on fears that inflation could flare up again just as investors were positioning for further Federal Reserve rate cuts. The yield on the benchmark 10-year Treasury note was up almost six points at 4.098%.
In the corporate space, Target posted lower annual sales as softer demand continued to weigh on the top line, despite a solid earnings beat in the fourth quarter, as the retailer said total sales fell 1.7% in the fiscal year to 31 January. Fourth‑quarter adjusted earnings came in at $2.44 per share, comfortably ahead of the $2.13 expected by analysts. However, guidance disappointed, with Target forecasting less than 1% growth in comparable sales and first‑quarter EPS of $1.30, both below Wall Street estimates.
Elsewhere, Best Buy delivered a mixed set of holiday‑quarter results as weaker sales offset an improvement in profitability. Best Buy reported a decline in quarterly sales, while full‑year sales for the period also fell. However, despite the softer top line, earnings came in ahead of forecasts, with Best Buy posting adjusted EPS of $2.44, above the $2.13 expected by analysts. For the current fiscal year, Best Buy expects revenue of $41.2bn to $42.1bn, compared with $41.69bn in the year just ended.
Still to come, cybersecurity technology firm CrowdStrike will publish its latest quarterly earnings figures after the close.
No major data points were scheduled for release on Tuesday, but market participants will keep a keen eye on speeches from Federal Resrve bankers John Williams, Jeffrey Schmid and Neel Kashkari throughout the course of the day.
Reporting by Iain Gilbert at Sharecast.com