Key insights
- US equity futures were muted as investors assessed rising inflation and escalating US-Iran tensions. Oil prices jumped, and Treasury yields edged higher. April inflation data showed the fastest pace in three years, driven by energy prices. AI optimism and earnings growth fueled the recent rally. Snowflake soared on an AI infrastructure deal. Geopolitical risks and inflation concerns pose downside risks for equities.
By Twesha Dikshit and Utkarsh Hathi
May 28 (Reuters) - Wall Street's main indexes were set to open flat on Thursday as escalating tensions between the U.S. and Iran dampened hopes of an imminent peace deal, while investors digested key inflation data.
Tehran targeted a U.S. airbase on Thursday after Washington launched fresh strikes. The move came hours after President Donald Trump rejected a report that he was close to a compromise deal with Iran.
Oil prices jumped over 2%, while U.S. Treasury yields edged higher with the continued closure of the Strait of Hormuz adding to inflation worries.
Data showed U.S. inflation increased at its fastest pace in three years in April, driven by higher energy prices amid the Iran war.
"I don't think the data changed the narrative. The number was not as bad as feared. That pushes back a little bit against some expectations for rate hikes," said Angelo Kourkafas, senior global investment strategist at Edward Jones.
"A lot of the focus will still be on the Iran negotiations and the AI trends and these are the two things that (will) drive the narrative for equities."
At 08:54 a.m. ET, Dow E-minis were down 75 points, or 0.15%, S&P 500 E-minis were down 1 points, or 0.01%, and Nasdaq 100 E-minis were up 16.5 points, or 0.05%.
AI OPTIMISM, EARNINGS GROWTH FUEL MARKET RALLY
Renewed confidence in AI and earnings growth momentum have underscored the recent rally, with all three major indexes closing at a record high on Wednesday.
The S&P 500 was on track for a ninth consecutive weekly gain, its longest winning streak since December 2023.
Before the bell, Marvell Technology rose 4.6% after first-quarter results. The company's shares have more than doubled so far this year.
Snowflake soared 37% after the data analytics firm lifted its annual product revenue forecast and announced a five-year AI infrastructure deal worth $6 billion with Amazon Web Services.
Peers Datadog , and MongoDB rose 3.8% and 9.4%, respectively.
Dollar Tree climbed 17% after the discount retailer lifted its full-year profit forecast, while Best Buy added 20% after the electronics vendor forecast second-quarter sales above estimates.
Kohl's gained 16.8% after the department store chain posted quarterly sales in line with estimates, and stuck to its annual targets.
Drone companies rose after the Wall Street Journal reported that the Trump administration was in talks to fund drone firms. Unusual Machines jumped 28.1% while AeroVironment and Kratos Defense & Security Solutions added 9.3% and 13.3%, respectively.
(Reporting by Twesha Dikshit and Utkarsh Hathi; Editing by Joyjeet Das and Devika Syamnath)