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U.S. stock index futures moved higher on Wednesday, reversing earlier losses after reports suggested that Iran could be open to negotiations aimed at ending the ongoing conflict in the Middle East.
By 06:00 ET (11:00 GMT), Dow Jones Futures rose 110 points (0.2%), S&P 500 Futures gained 20 points (0.3%), and Nasdaq 100 Futures advanced 90 points (0.4%).
Earlier in the session, futures had been under pressure following a negative close on Wall Street, where all three major indices recorded significant losses as investor risk appetite remained weak. Market caution has also increased ahead of a series of important economic data releases scheduled later this week.
Reports of possible peace talks lift sentiment
The Middle East conflict has now entered its fifth day, with fighting continuing across several fronts.
U.S. Admiral Brad Cooper, commander of U.S. forces in the Middle East, said Iran’s military capabilities had been significantly weakened. According to Cooper, Iran’s air defenses have been heavily degraded, its navy has lost operational control of key waterways after 17 vessels were sunk, and more than 2,000 Iranian targets have been struck.
Israel has also continued attacks against the Iran-backed Hezbollah group in Lebanon, following missile and drone strikes launched by the group after the death of Iran’s Supreme Leader Ayatollah Ali Khamenei during the initial strikes.
Meanwhile, Iran has fired missiles and drones at several neighboring Arab states hosting U.S. military bases, widening the scope of the conflict across the region.
However, The New York Times reported Wednesday that Iranian officials have signaled interest in discussing terms to end the war, citing sources familiar with outreach made to the CIA. The report helped ease market fears of a prolonged conflict.
Energy risks remain a major concern
Despite the tentative optimism, markets remain wary of the inflationary consequences of the conflict. A prolonged war could disrupt global energy supplies, particularly in the Gulf region, pushing oil and gas prices higher.
Oil has already surged this week amid fears of supply disruptions, especially around critical shipping routes. Sustained energy price increases could fuel global inflation, slow economic growth, and prompt central banks to maintain tighter monetary policies.
Labor market data in focus
Investor attention is also turning toward a series of key U.S. economic indicators scheduled for release this week.
Wednesday’s data calendar includes the ADP private payrolls report and the Federal Reserve’s Beige Book, which provides insight into economic conditions ahead of the Federal Open Market Committee meeting later this month.
Additional labor market data will follow on Thursday, including Challenger job cuts and weekly jobless claims, before the highly anticipated February nonfarm payrolls report on Friday.
The payrolls data is expected to provide the clearest signal about the health of the U.S. labor market and could significantly influence expectations for Federal Reserve interest rate policy.
According to the CME FedWatch tool, traders now expect interest rates to remain largely unchanged until at least July, as concerns about energy-driven inflation have reduced expectations for near-term rate cuts.
Corporate earnings continue
On the corporate front, CrowdStrike reported fourth-quarter results that exceeded Wall Street expectations and issued guidance for fiscal 2027 that was broadly in line with forecasts.
The cybersecurity firm said growing enterprise adoption of artificial intelligence is increasing demand for security solutions, as companies seek to protect AI infrastructure, workloads, and data.
Investors will also be watching earnings releases later Wednesday from Abercrombie & Fitch, Broadcom, and Okta, which could provide further clues about corporate performance and demand trends across key sectors.
