* Futures off: Dow 0.58%, S&P 500 0.32%, Nasdaq 0.41%
* Middle East conflict raises inflation concerns,
complicating Fed's policy decisions
* Broadcom jumps on strong AI chip revenue forecast
* Energy and defense stocks edge up as Middle East
conflict rages on
(Updates to before markets open)
By Johann M Cherian and Ragini Mathur
March 5 (Reuters) - Wall Street's main indexes were on
track to open lower on Thursday as the Middle East conflict
entered its sixth day, raising concerns of fresh inflation
pressures that could complicate the Federal Reserve's monetary
policy decisions.
Helping limit the losses was a strong forecast from
Broadcom that projected its artificial intelligence
chip revenue would exceed $100 billion next year, sending shares
of the chip designer up 6.4% in premarket trading.
Despite the U.S.-Israeli air war against Iran showing no signs
of cooling off, Wall Street's main indexes have fared better
than their European and Asian counterparts this week, aided
primarily by a rebound in technology stocks that bore the brunt
of February's selloff.
The tech-led recovery in the prior session helped the Nasdaq
recover all weekly losses, putting it on track to close the week
in positive territory if those gains hold through Friday.
Still, a prolonged disruption in shipping through the
strategic Strait of Hormuz is likely to further fuel inflation
pressures through energy and shipping costs, at a time when U.S.
tariffs have already complicated the Fed's monetary policy
outlook.
Any signs that crude prices could hit $100 a barrel would be
worrisome for markets and investors were on the lookout for
reports that the conflict could be nearing its end.
Policymakers have broadly acknowledged the need to wait and
gauge the impact on the economy, although investors are
anticipating price pressures to delay a 25-basis-point interest
rate cut by the Federal Reserve to September from July,
according to LSEG-compiled data.
"For the past couple of years, bringing inflation down has
been the Fed's entire focus, and they were finally making
progress. But if energy stays expensive, inflation could start
climbing again and that would force the Fed to rethink its
plans," said Adam Sarhan, chief executive of 50 Park
Investments.
At 08:43 a.m. ET, Dow E-minis were down 283 points,
or 0.58%, S&P 500 E-minis were down 22.25 points,
or 0.32%, and Nasdaq 100 E-minis
were down 103.25 points, or 0.41%.
The CBOE volatility index was up 0.95 points at 22.1,
reflecting broader investor caution, while futures tied to the
rate-sensitive Russell 2000 index were down 0.9%.
Travel stocks that are the most sensitive to energy prices were
down. Delta Airlines slipped 1.1%, while Norwegian
Cruise dipped 0.6%.
A prolonged conflict could also disrupt supplies of key
semiconductor manufacturing materials and impede data center
deployment by AI leaders in the Middle East. Chip stocks were
mixed, with Nvidia ( NVDA ) down 0.7%, while Marvell Technology ( MRVL )
rose 1.4%.
Energy companies such as Cheniere Energy and Valero
Energy ( VLO ) were up about 1%, while defense stocks such as
RTX and Aerovironment ( AVAV ) added 0.6% and 1.8%,
respectively.
Among others, Trade Desk ( TTD ) jumped 21% after a report that
OpenAI held early talks with the advertising technology firm to
sell ads.
Supermarket chain operator Kroger ( KR ) fell 2.7% after
forecasting annual sales and profit largely below estimates.
Meanwhile, data showed the number of Americans filing new
applications for unemployment benefits was unchanged last week.
Fresh Fed remarks from U.S. Fed Vice Chair Michelle Bowman are
due later in the day, ahead of the crucial non-farm payrolls
report on Friday.
(Reporting by Johann M Cherian, Ragini Mathur and Pranav
Kashyap in Bengaluru; Editing by Sherry Jacob-Phillips and
Devika Syamnath)