Pullback By Oil Prices May Lead To Initial Strength On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a higher open on Wednesday, with stocks likely to move back to the upside after ending the previous session well off their worst levels but still notably lower.

Traders may continue to look to pick up stocks at relatively reduced levels after an early sell-off on Tuesday dragged the major averages down to their lowest levels in three months.

Early buying interest may also be generated in reaction to a pullback by the price of crude oil, which is retreating after reaching its highest levels since June.

The pullback by the price of crude oil comes after President Donald Trump announced he has ordered the U.S. Development Finance Corporation to provide political risk insurance and guarantees for the security of maritime trade in the Middle East.

Trump also said the U.S. Navy would begin escorting tankers through the Strait of Hormuz if necessary, promising the "free flow of energy to the world."

The president's plan has helped offset concerns about energy supply disruptions as a result of the ongoing conflict that erupted following U.S. and Israeli attacks against Iran.

The futures remained positive following the release of a report from payroll processor ADP showing private sector employment in the U.S. increased by more than expected in the month of February.

After another sell-off at the start of trading on Tuesday, stocks once again staged a recovery attempt but did have as much success as Monday and still ended the day notably lower.

While the major averages climbed well off their worst levels of the day, they remained firmly in negative territory.

The Dow ended the day down 403.51 points or 0.8 percent at 48,502.27 after plummeting by more than 1,200 points to its lowest intraday level in almost three months.

The Nasdaq slumped 232.17 points or 1.0 percent to 22,516.69 and the S&P 500 slid 64.99 points or 0.9 percent to 6,816.63. The indexes had plunged by as much as 2.7 percent and 2.5 percent, respectively, hitting three-month lows.

The early nosedive on Wall Street came amid concerns about the fallout from the ongoing conflict in the Middle East.

As the conflict entered its fourth day, U.S. President Donald Trump suggested the war may last four to five weeks but could "go far longer than that."

Secretary of Defense Pete Hegseth also offered few details about the duration of the operation against Iran but claimed it will not be "endless," framing the conflict as a "generational" chance to reshape the Middle East.

The price of crude oil has continued to spike in response to the conflict, raising worries the jump in prices will lead to higher inflation.

The extended surge in oil prices came amid news Iran has closed the Strait of Hormuz in retaliation for the U.S. and Israeli attacks and threatened to fire on any ship trying to pass through the vital waterway.

Supply concerns were also worsened by the attacks on several oil refineries, including Saudi Aramco's oil facility in Ras Tanura.

"The longer oil and natural gas prices remain elevated, the greater the risk of a meaningful impact on inflation which could mean higher interest rates, an event that's typically negative for equity markets," said Dan Coatsworth, head of markets at AJ Bell.

Despite the recovery attempt by the broader markets, gold stocks continued to see substantial weakness amid a sharp pullback by the price of the precious metal.

The NYSE Arca Gold Bugs Index plummeted by 8.0 percent, pulling back further off the record closing high set last Friday.

Significant weakness also remained visible among semiconductor stocks, as reflected by the 4.6 percent plunge by the Philadelphia Semiconductor Index.

Steel, computer hardware, networking and oil service stocks also saw considerable weakness, while software stocks bucked the downtrend.

Commodity, Currency Markets

Crude oil futures are falling $0.58 to $73.98 a barrel after soaring $3.33 to $74.56 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $5,205.10, up $81.40 compared to the previous session's close of $5,123.70. On Tuesday, gold plunged $187.90.

On the currency front, the U.S. dollar is trading at 157.15 yen compared to the 157.71 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1642 compared to yesterday's $1.1613.

Asia

Asian stocks slumped on Wednesday as soaring oil and gas prices due to the escalating Middle East conflict spooked markets and fueled demand for safe-haven assets.

After U.S. and Israeli forces attacked Iran, Tehran retaliated by striking U.S. embassies and threatening regional economies. Shipping through the Strait of Hormuz was halted, quadrupling tanker costs and causing global air transport chaos.

Gold prices were up more than 1 percent in Asian trading, recovering some of the losses in the previous session even as the dollar extended gains for a third day running amid escalating geopolitical tensions and reduced expectations for interest rate cuts from the Federal Reserve.

Oil prices continued to rise, with Brent crude contract climbing above $83 a barrel on signs the war in Iran is expanding into a broader regional conflict.

With Iran seemingly intent on continuing its strikes against Gulf targets, regional leaders are mulling whether and how to respond.

China's Shanghai Composite Index slumped 1 percent to 4,082.47, with oil and shipping stocks leading losses on Hormuz closure fears. Hong Kong's Hang Seng Index tumbled 2 percent to 25,249.48 after the release of mixed Chinese PMI data.

While official data showed a second straight month of contraction in manufacturing PMI, a private survey revealed the strongest PMI in more than five years.

Japanese stocks were hit hard on concerns over surging oil prices and potential supply disruptions. Chip-related stocks led losses, with Tokyo Electron, Advantest and SoftBank Group plummeting 4-7 percent.

The Nikkei 225 Index briefly lost over 2,600 points before recovering some ground to end the session down 3.6 percent at 54,245.54, extending losses for a third consecutive session. The broader Topix Index plunged 3.7 percent to 3,633.67.

Seoul stocks fell by the most since the global financial crisis while the won slid to a 17-year low as surging crude prices raised concerns about manufacturing costs and export competitiveness.

The Kospi plummeted 12.1 percent to 5,093.54, extending losses for a second consecutive day and recording its largest-ever daily loss, with shipping and semiconductor giants Samsung Electronics and SK Hynix taking the hardest hit.

At one point, the Korea Exchange triggered a circuit breaker, temporarily halting trading.

Australian markets closed at a three-week low as escalating tensions in the Middle East fueled inflation concerns and overshadowed stronger-than-expected domestic GDP data for the fourth quarter.

Data showed the economy grew at an annual rate of 2.6 percent in the December quarter, marking the fastest pace in almost three years.

The benchmark S&P/ASX 200 Index tumbled 1.9 percent to 8,901.20, dragged down by gold miners, financials and airline stocks. The broader All Ordinaries Index settled 1.9 percent lower at 9,117.10.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index dropped 0.7 percent to 13,531.12, extending losses for a third straight session.

Europe

European shares steadied on Wednesday after U.S. President Donald Trump indicated that the U.S. Navy would escort oil tankers through the Strait of Hormuz to safeguard maritime trade in the Gulf and help stabilize surging global energy prices.

Additionally, the U.S. Development Finance Corporation (DFC) has confirmed its readiness to extend political risk insurance and guarantees for energy shipments passing through the Gulf.

With European thermal-coal prices surging to their highest level since October 2023 and exchange prices for gas in Europe rising by 11 percent today, Europe is in crisis mode. Brent crude crossed $83 a barrel after Iran blocked the oil shipping channel in the Middle East.

In economic news, the HCOB Eurozone services PMI business activity index rose from 51.6 in January to 51.9 in February, hitting a two-month high and matching expectations.

The German DAX Index is up by 1.7 percent, the French CAC 40 Index is up by 1.2 percent and the U.K.'s FTSE 100 Index is up by 0.8 percent.

Shares of Dutch chip-making equipment supplier ASM International have moved sharply higher. The company raised its 2026 forecast and announced a 150-million-euro buyback plan for 2026-2027 after posting better-than-expected net profit for the final quarter of 2025.

France's Dassault Aviation has also shown a significant move to the upside after its 2025 sales topped forecasts.

Meanwhile, British homebuilder Vistry Group has plummeted after an announcement that its executive chairman Greg Fitzgerald would step down over the next year.

Engineering firm Weir Group has also moved sharply lower after its full-year earnings decreased compared to the previous year.

Pharmaceuticals and crop protection group Bayer has also tumbled after widening its Q4 loss due to litigation costs over its Roundup weedkiller.

Sportswear maker Adidas has also shown a substantial move to the downside after announcing changes in its supervisory board.

U.S. Economic News

A report released by payroll processor ADP on Wednesday showed private sector employment in the U.S. increased by more than expected in the month of February.

ADP said private sector employment climbed by 63,000 jobs in February after rising by a downwardly revised 11,000 jobs in January.

Economists had expected private sector employment to grow by 48,000 jobs compared to the addition of 22,000 jobs originally reported for the previous month.

Private sector employment saw the biggest increase since July 2025, led by job growth in the construction and education and health services sectors, ADP said.

At 10 am ET, the Institute for Supply Management is scheduled to release its report on service sector activity in the month of February.

The ISM's services PMI is expected to edge down to 53.6 in February from 53.8 in January, but a reading above 50 would still indicate growth.

The Energy Information Administration is due to release its report on crude oil inventories in the week ended February 27th at 10:30 am ET. Crude oil inventories are expected to increase by 2.2 million barrels.

At 2 pm ET, the Federal Reserve is scheduled to release its Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts.