Futures Decline Amid Middle East Violence; Vance-Walz Debate

US stock futures are experiencing a decline as traders focus on the escalating violence in the Middle East. Iran has announced that its air bombardment of Israel has concluded, however, Israeli leaders have promised to respond to this attack. This escalation follows Iranian missile strikes, which were a reaction to Israeli operations against Hezbollah in Lebanon, contributing to a drop in equities on Wall Street during the previous trading session.

1. Futures Dip

On Wednesday, US stock futures were lower as investors remained anxious about the rising tensions in the Middle East. By early morning, one contract had decreased by 111 points (0.3%), another had lost 8 points (0.1%), and a third had fallen by 30 points (0.1%).

The main indices on Wall Street experienced losses in the previous session due to the impact of the Iranian missile strikes on Israel. The 30-stock index fell by 174 points (0.4%), the benchmark index declined by 54 points (1.0%), and the tech-heavy index fell by 279 points (1.5%), although they managed to recover somewhat from their lowest points.

Despite the overall market decline, shares in energy companies saw an increase, reflecting a rise in oil prices. Defense stocks, such as Northrop Grumman and Lockheed Martin, also experienced gains.

2. Iran Claims Missile Attack Concluded

Iran has stated that its recent missile attack on Israel was its largest to date but warned that it could resume strikes if provocations continue. In response, Israeli officials are reportedly preparing for a "significant" retaliation that may target key oil facilities in Iran and other strategic locations.

Israeli Prime Minister Benjamin Netanyahu remarked that Iran "made a big mistake" and assured that they would "pay for it." The US government has indicated that there would be "severe consequences" for Iran’s actions, with Defense Secretary Lloyd Austin emphasizing readiness to defend US interests in the region.

The Iranian attacks were triggered by recent Israeli military actions against Hezbollah in Lebanon and the ongoing conflict in Gaza. The US, United Nations, and European Union have all called for a ceasefire in Lebanon, but hostilities persisted as of Wednesday morning.

3. Oil Prices Rise Amid Conflict

Oil prices increased on Wednesday, building on substantial gains from the previous session amid fears that conflicts in the Middle East could disrupt crude production. By early morning, one contract rose by 2.6% to $75.50 per barrel, while another climbed 2.8% to $71.80 per barrel. Both benchmarks recorded over a 5% gain on Tuesday following Iran’s missile strike on Israel.

Additionally, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are set to convene later today, although no changes in output are anticipated. US crude inventories reportedly fell by about 1.46 million barrels for the week ending September 27, compared to expectations of a 2.1 million barrel decline, with the official government inventory report due for release later today.

4. Vance-Walz Debate Recap

In the only debate on Tuesday, US vice-presidential candidates JD Vance and Tim Walz clashed over the merits of their respective running mates and the achievements of the last two administrations. Vance, the Republican nominee, provided a strong defense of former President Trump and highlighted his economic record. Conversely, Walz, who is aligned with Democrat Kamala Harris, was initially less assertive but gained momentum when criticizing Trump’s denial of his 2020 election loss.

The debate became heated at times; however, it maintained a notably civil tone compared to previous exchanges between Trump and Harris.

5. Nike Withdraws Financial Guidance

Shares of Nike plummeted in after-hours trading following the company’s decision to retract its annual financial forecast and report a 10% drop in quarterly revenue. The Oregon-based athletic apparel maker announced sales of $11.59 billion for the latest quarter, slightly below analyst expectations of $11.65 billion. Net income decreased by 28% to $1.1 billion.

This downturn coincides with an executive shake-up, where CEO John Donahoe will be replaced by company veteran Elliott Hill. CFO Matthew Friend stated that the decision to withdraw the fiscal year 2025 guidance is related to the leadership transition, with the company opting for quarterly forecasts moving forward. Nike anticipates reporting an 8% to 10% decline in revenues for the current quarter.