Houthi attacks on two Saudi tankers in the Red Sea sent Brent crude above $98 a barrel, adding to pressure from weak Alphabet and Tesla results
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Dow Jones Industrial Average futures were off 341 points, equivalent to a 0.65% decline, with S&P 500 futures down 0.64% and Nasdaq $NDAQ 100 futures losing 0.89%.
Brent crude futures climbed roughly 5% to top $98 a barrel, and U.S. West Texas Intermediate futures were up about 4.5% to approximately $90.95 a barrel. The two benchmarks had not traded this high since before Washington and Tehran struck a deal to halt hostilities last month.
Yemen's Tehran-backed Houthi militant group said it was behind strikes on two Saudi tankers in the Red Sea, heightening anxiety over a potential broadening of the Middle East conflict. Prices extended their gains after U.S. President Donald Trump threatened to bomb Iranian infrastructure. "The strikes between the U.S. and Iran show no sign of easing, and the Houthis said they targeted two oil tankers in the Red Sea yesterday, raising fears that the conflict is widening," Deutsche Bank's Jim Reid wrote in a note on Thursday. "So that's pushed oil prices up to a 7-week high and has also fueled speculation about more rate hikes."
Rising oil prices pushed government bond yields higher, particularly in Europe, reflecting concern that inflation could accelerate again. The U.S. 10-year Treasury yield stood at 4.697%.
Alphabet stock added to the pressure on equities after Google's parent company raised its 2026 capital expenditure forecast to as much as $205 billion, pointing to strong artificial intelligence demand. Alphabet shares were down more than 5% before the open, according to CNBC. The move reflected a broader wariness that has built up among investors over recent months regarding the pace of AI infrastructure outlays at large technology firms.
Tesla shares fell more than 6% after the company's second-quarter results came in well below expectations, according to The Wall Street Journal. Cost growth outpaced revenue gains over the quarter, and the company's free cash flow swung to negative territory.
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