US stock market today: Dow, S&P 500 futures drop up to 1% as oil rally and Middle East risks hit sentiment

US stock futures pointed to another weak start on Wednesday, 8 July, as crude oil prices resumed their rally amid renewed tensions in the Middle East, further weighing on market sentiment that had already been dented by a sell-off in chip stocks.

Futures tied to the S&P 500 fell 0.8%, while Dow Jones Industrial Average futures were down 1%. Nasdaq futures slipped 1.1%, signalling a second straight session of losses on Wall Street.

In the previous session, all three major indices ended lower as investors turned cautious on chip stocks, with valuation concerns resurfacing after their sharp rally over the past few months.

With momentum in semiconductor stocks fading, the renewed escalation in the Middle East has further weakened investor sentiment. The US launched strikes on Iran early Wednesday, hours after revoking a licence that had authorised the sale of Iranian oil, saying the move was in response to Tehran's alleged attacks on ships transiting the Strait of Hormuz.

In retaliation, Iran reportedly resumed attacks in the region, launching missiles at US military sites in Bahrain and Kuwait. Both sides have accused each other of violating the ceasefire agreement.

Following the latest escalation, US President Donald Trump declared the ceasefire and memorandum of understanding (MoU) with Iran effectively over, reviving fears of a broader conflict in West Asia and renewed disruptions to global energy supplies that could stoke inflationary pressures.

Speaking in Ankara ahead of a NATO summit, Trump said he had no interest in further engaging with Iran, signalling that the diplomatic breakthrough created by the 18 June MoU had effectively collapsed.

The conflict, which began in late February, continued until April before a ceasefire was announced. The subsequent interim peace agreement had reassured investors that both sides were keen to avoid a prolonged conflict.

US equities had rallied since the end of March, supported by a strong corporate earnings season and continued optimism over the growth potential of artificial intelligence.

Meanwhile, investors will closely watch the release of the Federal Reserve's June meeting minutes later in the day. The minutes take on added significance after Chair Kevin Warsh shortened the policy statement and refrained from providing updated interest rate projections.

Crude oil prices remain higher for second session

Crude oil prices extended their gains on Wednesday as fears mounted that shipping through the Strait of Hormuz, which had been gradually returning to normal, could once again be disrupted amid renewed tensions in West Asia.

Oil prices also reacted to Trump's remarks that the ceasefire agreement with Iran was "over". The renewed conflict revived concerns over fresh disruptions to global energy supplies by discouraging shipowners and regional producers from using the vital shipping route.

After closing nearly 3% higher in the previous session, Brent crude futures climbed another 6%, or $4.15 per barrel, to an intraday high of $78. WTI crude futures also gained 6%, or $4.28 per barrel, to touch an intraday high of $74.74.

The latest rebound comes after both crude benchmarks had retreated to pre-war levels earlier this month as shipping through the Strait of Hormuz improved, prompting major Middle Eastern oil producers to ramp up output.

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