US STOCKS-Wall St futures tepid as Middle East tensions keep investors wary

U.S. stock index futures were muted on Thursday after a batch of mixed corporate earnings failed to spur a rush into equities, keeping attention focused on ‌Middle East tensions during the first week of a historically weak month for returns. The subdued moves could add to the gloom that has crept into markets after the latest round of military strikes between the U.S. and Iran.

Investors hungry for positive catalysts may now turn to Friday's jobs data, but some ‌have cautioned against placing too much emphasis on the report as Federal Reserve Chair Kevin Warsh has indicated that his priority is ‌controlling inflation. Odds of a rate hike have seen a sharp increase over the past week, with traders pricing in a 60% chance of a hike in September, according to the CME FedWatch tool.

A prolonged conflict in the Middle East could increase chances of a further hike. Brent crude futures rose 1.68% on Thursday — their fourth consecutive day of ⁠gains. "Oil ​has rebuilt some geopolitical premium, creating ⁠another potential inflationary headache at a time when markets are already debating whether U.S. rates need to move higher," said Daniela Hathorn, senior market analyst at Capital.com.

U.S. Treasury yields ⁠eased as a bond market selloff slowed. High Treasury yields have pressured stocks in the last few weeks. "I'm confident that the remainder of the year will bring ​new disruptions, but one disruption I'm less concerned about is higher yields," said Benjamin Jones, global head of research at Invesco.

At 7:04 a.m. ⁠ET, Dow E-minis were up 44 points, or 0.08%, S&P 500 E-minis lost 1.5 points, or 0.02%, and Nasdaq 100 E-minis fell 48.25 points, or 0.17%. Still, the three major ⁠U.S. ​indexes ended higher on Wednesday, helped by gains in technology and materials.

Meanwhile, Broadcom fell 2.82% in premarket trading, weighing on Nasdaq futures. The company's fourth-quarter revenue forecast fell short of Wall Street's lofty expectations, underscoring that the firms at the center of the AI buildout have a ⁠high bar to clear. Snowflake soared 24.29% after forecasting strong annual revenue, boosting sentiment across the software sector. ServiceNow rose 2.9%, while Salesforce and Adobe gained ⁠about 1.8% and 1%, respectively.

With ⁠geopolitical risks clouding the outlook and the earnings calendar offering few clear catalysts, investors may have limited reasons to push stocks meaningfully higher during a typically weak month. Nine of the 40 worst drops in the history ‌of the S&P ‌500 index happened during September, according to eToro analyst Jakub Rochlitz.