Middle East Tensions and Oil Prices Drag US Equity Futures Lower

US equity futures declined in pre-bell trading Thursday as traders weighed escalating Middle East tensions and rising oil prices. Dow Jones Industrial Average futures fell 0.5%, S&P 500 futures dropped 0.9%, and Nasdaq futures slipped 1.6%.

The geopolitical risk premium emerged from continued attacks by Iran-backed Houthi forces on Saudi Arabian infrastructure. Multiple reports indicated that the United States has ordered non-emergency government employees and their families to leave the Middle Eastern country. The New York Times reported, citing US officials, that the US and Israel have mapped out plans for fresh strikes on Iran following the upcoming US midterm elections next month.

Energy markets reflected the heightened risk, with front-month global benchmark North Sea Brent crude rising 2.8% to $111.87 per barrel. US West Texas Intermediate crude increased 2.4% to $99.44 per barrel. These price gains added to the macroeconomic backdrop as investors assessed recent economic data. Initial jobless claims for the week ended Oct. 17 dropped to 194,000 from 200,000 in the prior week, a decline that contrasted with Bloomberg-surveyed expectations for no change.

Corporate earnings also featured prominently in the pre-market session. Procter & Gamble (PG) shares climbed 2.7% after the company reported higher fiscal Q1 core earnings and net sales. Western Digital (WDC) is scheduled to report its fiscal Q1 earnings after the close, with FactSet-pollled analysts expecting $4.11 per share in earnings on $4.14 billion in revenue.

Global markets mirrored the risk-off sentiment. Japan's Nikkei closed 2.7% lower, while Hong Kong's Hang Seng ended the session down 3%. China's Shanghai Composite finished 1.5% lower. In Europe, the UK's FTSE 100 was down 0.1% and Germany's DAX index fell 0.6% in the early afternoon session.

Among major US stocks, Meta Platforms (META) shares fell 2.4% despite the company posting higher Q3 earnings and revenue late Wednesday. Tesla (TSLA) shares dropped 3.6% after reporting lower adjusted earnings and revenue for Q3. SpaceX (SPCX) stock declined 3% following a Reuters report that its proposed $3.5 trillion merger with Tesla could face delays of several weeks, as concerns arose over potential shareholder scrutiny following Elon Musk's public endorsement of the deal.

Lockheed Martin (LMT) shares rose 4.9% after the company posted a Q3 beat on earnings and sales and raised its 2026 EPS and sales outlook. Walmart (WMT) stock gained 1.4% after announcing plans to deploy AI agents capable of executing purchases on behalf of shoppers within set budgetary limits.