MARKET SNAPSHOT: U.S. Stocks: Futures Down Sharply As Middle East Tension Adds To Risk-averse Mood

By Barbara Kollmeyer and Al Lewis, MarketWatch

MADRID (MarketWatch) -- A day after heavy losses for Wall Street, stock futures indicated sellers may still be in control Thursday, as investors flocked to commodities and the yen, with Middle East tensions adding to jitters.

Futures for the Dow Jones Industrial Average (YMM5) slid 156 points, or 0.9%, to 17,498, while those for the S&P 500 index (ESM5) dropped 17 points, or 0.8%, to 2,036.75. Futures for the Nasdaq-100 index (NQM5) fell 45.25 points, or 1%, to 4,278.

Selling in tech and biotech stocks drove the carnage on Wall Street Wednesday. The S&P 500 (SPX) and Dow industrials (DJI) each logged the worst losses in two weeks. The Nasdaq Composite (RIXF) finished 2.4% lower, and the iShares Nasdaq Biotechnology ETF (IBB) slid 4.1%.

Rather than Michael O'Rourke, chief market strategist at JonesTrading, believes what's happening is the market is starting to view previous tailwinds as headwinds.

"When one considers the trends behind the major top-down elements that investors watch -- 1. fundamentals in the form of earnings, 2. policy in the form of the Fed, and 3. economic data -- all three were previous tailwinds that appear to be transforming to headwinds as of late," O'Rourke said in a note.

Others blamed the selloff on a number of factors: earnings jitters, investors cashing in on recent run-ups for biotechs and other stocks, and a drop in durable-goods orders that triggered U.S. growth concerns. Picking up the selling baton, the Stoxx Europe 600 index stumbled 1.3%. The Nikkei 225 index posted the biggest losses in two months, with a 1.4% decline.

Read: Stocks are overpriced, overleveraged, headed for trouble (http://www.marketwatch.com/story/stocks-are-overpriced-overleveraged-headed-for-trouble-2015-03-25)

Middle East tension also added to the mix. Investors drove up gold prices (GCJ5), which shot through the psychologically important level of $1,200 an ounce, while oil prices (CLK5) surged nearly 5% as reports of Saudi strikes in Yemen triggered worries about crude supply. The yen (USDJPY), another perceived-safe-haven asset, also surged against the dollar.

Read: Oil prices surge as Saudi strikes in Yemen trigger supply worries (http://www.marketwatch.com/story/oil-prices-surge-as-saudi-strikes-in-yemen-trigger-supply-worries-2015-03-26)

(http://www.marketwatch.com/story/oil-prices-surge-as-saudi-strikes-in-yemen-trigger-supply-worries-2015-03-26) (http://www.marketwatch.com/story/oil-prices-surge-as-saudi-strikes-in-yemen-trigger-supply-worries-2015-03-26) (http://www.marketwatch.com/story/oil-prices-surge-as-saudi-strikes-in-yemen-trigger-supply-worries-2015-03-26)The only data on tap for Thursday is weekly jobless claims, due at 8:30 a.m. Eastern Time. Speaking in Frankfurt earlier, St. Louis Fed President James Bullard said risks of keeping U.S. policy of rates at zero too long could be "substantial."

"Now may be a good time to begin normalizing U.S. monetary policy so that it is set appropriately for an improving economy over the next two years," Bullard said in prepared remarks to the OMFIF City Lecture in Frankfurt, The Wall Street Journal reported (http://blogs.wsj.com/economics/2015/03/26/feds-bullard-risks-of-keeping-u-s-policy-rates-at-zero-too-long-may-be-substantial/?KEYWORDS=bullard).

Fed Vice Chair Stanley Fischer will speak in Frankfurt on the U.S. nonbank financial sector at 6:30 a.m. Eastern. Atlanta Fed President Dennis Lockhart, a voting member of the Fed, takes part in an on-stage discussion in Detroit about U.S. monetary policy and economic outlook at 9 a.m. Eastern Time.

Stocks to watch: GameStop Corp.(GME), Lululemon Athletica Inc.(LULU), Restoration Hardware Holdings Inc.(RH) and ConAgra Foods Inc.(CAG) will report Thursday.

Red Hat Inc.(RHT) shares could add to a late rally Wednesday on the heels of better-than-expected results (http://www.marketwatch.com/story/red-hat-apollo-education-pvh-earnings-in-focus-2015-03-24).

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