US stock futures dip as soaring oil prices, Fed outlook spook investors

By Johann M Cherian and Utkarsh Hathi

March 19 (Reuters) - U.S. stock index futures slipped on Thursday as crude prices soared on intensifying hostilities in the Middle East, reviving inflation worries that have prompted the Federal Reserve to take a more cautious stance on interest rate cuts this year.

A strong forecast from Micron Technology did little to uplift sentiment, with its shares dropping 5.9% in premarket trading, as investors mulled the chip company's higher spending plans given?elevated borrowing costs.?

Other memory chip stocks that have rallied this year were also knocked down. SanDisk fell 5.5%, Western Digital slipped 2.9%, while AI leader Nvidia dipped 0.3%.

Brent crude prices hit $115 a barrel after Iran attacked energy facilities across the Middle East in retaliation to Israel's strike on its South Pars gas field. The U.S. benchmark, however, was trading at its widest discount to Brent in 11 years due to releases from U.S. strategic reserves and higher freight costs.?

The Fed left rates unchanged on Wednesday and Chair Jerome Powell flagged higher inflation ahead. He added it was too soon to gauge the repercussions?of the war on the economy and stuck to the prior forecast of one 25-basis-point rate cut this year.??????

Morgan Stanley joined Goldman Sachs and Barclays in pushing back its forecast for an interest rate cut to September from June. Traders are no longer pricing in a rate cut for this year and LSEG-compiled data now points to a dovish move only in mid-2027.

"The big takeaway from the Fed decision is that the Fed will not be riding to the economy's rescue, even if gas and diesel prices keep rising," said Bill Adams, chief economist for Comerica Bank.

"Monetary policy can slow growth and inflation, or it can speed up growth and inflation. But it can't offset an energy supply shock, which weakens growth at the same time that it raises inflation."

At?07:12 a.m. ET, Dow E-minis were?down?58?points, or?0.13%, S&P 500 E-minis were?down?13.25?points, or?0.20%, and Nasdaq 100 E-minis were?down?83.75?points, or?0.34%.

Stocks and bonds slid following the Fed verdict, sending the Dow and Nasdaq below their 200-day moving averages (DMA), while the benchmark S&P 500 hit a four-month low, putting it just a whisker away from breaching its own long-term moving average. The 200 (DMA) is a technical indicator reflecting long-term momentum.?

Investors will be keen on any potential commentary from policymakers later in the day, along with the weekly jobless claims report.

Also in focus will be a U.S.-Japan summit that President Donald Trump may use to press for help on the war in Iran after his earlier call on allies to safeguard passage through the strategic Strait of Hormuz went unanswered.?

Energy price-sensitive travel stocks such as Delta Air and United were modestly lower, while cruise stocks such as Norwegian and Carnival were also slightly down.?

Expectations for higher interest rates and a stronger dollar weighed on prices of precious metals, sending miners such as Gold Fields and Endeavour Silver down 9.4% and 6.1% respectively.?

(Reporting by Johann M Cherian and Utkarsh Hathi in Bengaluru; Editing by Devika Syamnath)