U.S. stock index futures were steady on Thursday evening as traders adopted a cautious stance ahead of scheduled ceasefire talks involving the U.S. and Iran and before the arrival of key consumer inflation figures. The muted futures action followed a positive trading session on Wall Street, where hopes for a cooling of hostilities in the Middle East and renewed momentum in technology shares helped extend the S&P 500's winning streak.
At 20:03 ET (00:03 GMT), S&P 500 Futures were down 0.1% at 6,854.75 points. Nasdaq 100 Futures also eased 0.1% to 25,216.50 points, and Dow Jones Futures declined 0.1% to 48,367.0 points.
Ceasefire talks scheduled in Pakistan
Delegates from the United States and Iran are due to meet in Pakistan in the coming days after both sides reached a tentative agreement earlier in the week for a two-week ceasefire. Despite that accord, Iran quickly accused Israel and the U.S. of breaching the ceasefire and demanded Lebanon be included in any settlement. Israel said it would separately negotiate a ceasefire with Beirut while clashes between the two countries continued.
It remained unclear whether Iran would attend the Pakistan discussions. Iran's ambassador to Pakistan deleted a social media post that had said an Iranian delegation would arrive in Islamabad on Thursday night, raising uncertainty about Iran's participation.
The talks come amid substantial policy differences between Washington and Tehran on matters including control of the Strait of Hormuz. Iran was observed leaving the strait largely blocked during the week despite earlier statements that it would allow safe passage through Hormuz for the two-week ceasefire period. Still, even the prospect of direct U.S.-Iran negotiations - the first since their conflict began in late February - buoyed risk appetite on Wall Street and supported recent buying activity.
Wall Street gains and sector leadership
On Thursday, benchmark indexes moved higher with the S&P 500 rising 0.6% to 6,824.63 points. The NASDAQ Composite climbed 0.8% to 22,822.42 points, and the Dow Jones Industrial Average increased 0.6% to 48,185.80 points. Market participants attributed much of this advance to bargain hunting after steep losses in March tied to uncertainty about the Iran war, with technology names and semiconductor-related stocks among the primary beneficiaries.
Investors have been rotating into tech ahead of a slate of important earnings from the sector. Taiwan Semiconductor Manufacturing Co. (NYSE: TSM), the largest contract chipmaker, is scheduled to report first quarter results next week, as is semiconductor equipment manufacturer ASML (NASDAQ: ASML).
Inflation data in focus for Fed policy cues
Market participants were also focused on the U.S. consumer price index for March, due Friday. The consensus view mentioned in market commentary was that headline inflation would register a sharp rise, largely driven by higher fuel costs linked to the Iran conflict.
Disruptions at the Strait of Hormuz contributed to a global uptick in oil and gas prices during the week, which translates into increased costs for fuel and utilities and could push headline inflation higher in the near term.
The CPI release follows minutes from the Federal Reserve's March meeting, which showed policymakers were worried about the inflationary impacts of the Iran war. Any indication that inflation is becoming more persistent would likely complicate the Fed's path to cutting interest rates later in the year, according to prevailing market interpretation of the minutes. The CPI comes after Thursday's report that the personal consumption expenditures price index for February, the Fed's preferred inflation gauge, printed in line with expectations.
Also on Thursday, gross domestic product figures revealed that U.S. economic growth in the fourth quarter was substantially slower than previously estimated.
Implications for investors
With markets reacting to both geopolitical developments and upcoming macroeconomic releases, investors are balancing the prospect of reduced conflict-related risk against the risk that rising energy costs will feed through to broader inflation. Technology and semiconductor-related stocks have led recent gains, but headline inflation readings and Fed policy signals remain critical near-term drivers of market direction.