US stock futures fell sharply on Wednesday after President Donald Trump declared that the interim agreement aimed at ending the conflict with Iran was "over," triggering a surge in oil prices.
Speaking in Ankara ahead of a NATO summit, Trump stated he doesn’t plan to be involved in any kind of engagement with Iran, significantly increasing fearing renewed tensions in the Middle East.
The comments pushed both Brent crude and U.S. West Texas Intermediate crude futures up by over 6%.
US-Iran exchanged strikes, triggering renewed conflict
Trump’s comments come after the US and Iran exchanged strikes last night, as the US struck Iran, which was retaliated by the country via strikes on US bases in the Middle East, prompting widespread tensions across the region.
By early trading, Dow futures had significantly declined to 1.34%, S&P 500 futures fell 1.06%, and Nasdaq 100 futures lost 1.55%, while the Russell 2000 index dropped to 1.5%.
The CBOE Volatility Index (VIX), often referred to as Wall Street's fear gauge, rose to its highest level in over a week.
Increasing oil prices increased energy stocks, with Chevron, Exxon Mobil, Devon Energy, Diamondback Energy all, APA Corp, and all posting premarket gains.
Meanwhile, travel-related stocks came under pressure as investors worried regarding soaring fuel costs.
Shares of United Airlines, Southwest Airlines, Delta Air Lines, Carnival, Royal Caribbean, and Norwegian Cruise Line all declined in premarket trading.
Investors are also awaiting the release of the Federal Reserve's June meeting minutes later Wednesday for clues on future interest rate policy. Technology stocks remained weak, although Broadcom trimmed losses after Apple announced a chip supply deal worth over $30 billion with the company.
