KEY POINTS
- Dow futures rose 181 points to 50,728 on Thursday morning, building on Wednesday's record close of 50,644 as traders priced in a potential Iran deal to reopen the Strait of Hormuz.
- The prospect of normalized oil flows through the strait — which handles roughly 20% of global crude and LNG shipments — sent Brent crude sliding below $97 and gave risk assets room to run.
- Traders should watch for the 8:30 a.m. GDP second estimate and PCE inflation print, both of which could reverse this morning's optimism if the numbers come in hot.
Dow futures climbed 181 points to 50,728 early Thursday, extending the blue-chip index's momentum after Wednesday's record close at 50,644.28. S&P 500 futures added 0.35% to 7,563, while Nasdaq 100 futures jumped 0.65%, lifted by a partial recovery in semiconductor names that had weighed on the tech-heavy index earlier in the week.
The overnight bid came from two directions. First, Iranian state television reported late Wednesday that Tehran would allow commercial shipping through the Strait of Hormuz to return to pre-war levels within one month of a finalized deal. Second, a broader risk-on tone in Asian and European sessions carried through to U.S. pre-market trading, with the Stoxx Europe 600 gaining 0.4% overnight.
Oil's Retreat Is the Market's Oxygen
The link between crude prices and equity sentiment has rarely been this direct. West Texas Intermediate fell 5.55% on Wednesday to settle at $88.68 a barrel after the Hormuz headlines crossed, its sharpest single-session decline since early April. Brent crude, which had traded above $109 just weeks ago during peak conflict fears, stabilized near $96.63 on Thursday morning. That pullback matters because elevated energy costs have been the primary transmission mechanism from geopolitics to corporate margins this quarter.
Airlines, consumer discretionary stocks, and transportation names led the Dow higher on Wednesday, with the index gaining 182.60 points while the S&P 500 eked out a fractional 0.02% advance. The divergence between the Dow and the Nasdaq told a story: old-economy beneficiaries of lower oil prices outperformed while chip stocks, still digesting Nvidia's post-earnings selloff, acted as a drag on the broader tech complex.
Two Data Points That Could Change Everything
The real test for Thursday arrives at 8:30 a.m. Eastern when the Bureau of Economic Analysis releases both the second estimate of Q1 GDP and the April PCE inflation reading. The advance GDP estimate published April 30 showed 2.0% annualized growth, a sharp rebound from Q4 2025's sluggish 0.5%. Economists expect the second estimate to hold near that level, though revisions to trade and inventory data could push the number in either direction.
The PCE print is the one the Fed watches most closely. BofA Securities forecasts headline PCE at 0.4% month-over-month and 3.8% year-over-year, with core PCE at 0.3% month-over-month and 3.3% year-over-year. Both readings would represent an acceleration from March's 3.5% headline and 3.2% core figures, reinforcing the uncomfortable reality that inflation remains well above the Fed's 2% target despite a slowing labor market.
Futures markets heading into Thursday priced a 74.5% probability that the Fed holds rates at 3.50%–3.75% through year-end. A hot PCE print could push the probability of a rate hike higher — it already rose to 14.9% from 0.8% a month ago — while a cooler reading would reinforce the market's base case that the Fed stays put.
What the Tape Tells You
The S&P 500 has now closed at or near record highs for three consecutive sessions, but breadth remains uneven. The Dow's outperformance over the Nasdaq this week reflects a market that is rotating toward value and cyclical names that benefit from lower energy costs, not a market that is uniformly bullish on growth. Traders positioning for the rest of the week need to watch the PCE number at 8:30 a.m. and the 10-year Treasury yield's reaction. A move above 4.60% on the 10-year would likely cap further equity upside, while a benign inflation print combined with progress on the Hormuz deal could push the S&P 500 through 7,600 by Friday's close.
