US STOCKS-S&P 500, Nasdaq eye tepid open as Middle East tensions weigh

The S&P 500 and the Nasdaq 100 indexes looked set for a subdued open on Thursday following mixed corporate earnings as investors ‌remained focused on Middle East tensions. The muted moves, at the start of a historically weak month for market returns, could deepen the gloom following the latest military exchanges between the U.S. and Iran.

Investors hungry for positive catalysts are now eyeing 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 controlling inflation remains his top priority. Odds of a rate ‌hike have seen a sharp increase over the past week, with traders pricing in a 62% chance of a hike in September, according to the CME FedWatch tool.

"I'm expecting a pretty crazy September. It's just roller coaster season," said Kim Forrest, chief investment officer at Bokeh Capital Partners. A prolonged conflict in the Middle East could increase chances of ⁠a ​rate hike by compounding inflation pressures. ⁠Brent crude futures rose 1.22% 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. An easing in U.S. Treasury yields offered some respite. Elevated yields have ​weighed on stocks in recent 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 08:29 a.m. ET, Dow E-minis rose 147 points, or 0.28%, S&P 500 E-minis inched up ⁠4.5 ​points, or 0.06%, and Nasdaq 100 E-minis slipped 39.25 points, or 0.13%.

Broadcom fell 3.32% 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 23.18% after forecasting strong annual revenue, boosting sentiment across the software sector. ServiceNow rose 3.17%, while Salesforce and Adobe gained ⁠about 1.50% and 1.45%, 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 this 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.