Dow Jones futures slip as traders adopt caution on US-Iran tensions

Dow Jones futures lose 0.30% to trade around 52,290 during European trading hours on Wednesday. Meanwhile, S&P 500 futures and Nasdaq 100 futures decline 0.38% and 0.85%, trading near 7,520 and 29,070, respectively.

US stock futures edged lower as market sentiment turns cautious amid growing risk aversion due to escalating geopolitical tensions between the United States and Iran. US President Donald Trump downplayed the likelihood of immediate negotiations with Tehran, pledging to respond if the Houthi militants interfered with the waterway, though he did not outline specific action.

Iran's top military command responded by stating via the Xinhua news agency that Tehran will expand its strikes to target US and allied assets across the region if the US attacks Iranian nuclear facilities.

CME FedWatch Tool indicates that markets are currently pricing in over 69% odds of at least a 25 basis-point rate hike at the upcoming September meeting. However, the Fed is widely expected to leave the federal funds rate unchanged. Despite this anticipated pause, expectations for tighter policy remain elevated beyond July.

Wall Street posted solid gains on Tuesday’s regular session, with the Nasdaq surging 1.29%, while the S&P 500 and the Dow Jones advanced by 0.89% and 0.74%, respectively. Chipmakers drove the rally following strong export data out of Taiwan and South Korea, which reinforced confidence in global semiconductor demand.

Meanwhile, robust quarterly results from blue chips like 3M and General Motors reassured investors about corporate health. Markets now turn their focus to the next wave of major earnings, including reports from Alphabet, Tesla, Texas Instruments, GE Vernova, and Philip Morris.