US pre-open: Futures slip after airstrike on Gaza hospital

Surging oil prices and elevated bond yields were weighing on US stock futures on Wednesday as the deadly conflict in Gaza escalated with the bombing of a hospital in Gaza.

In pre-market dealings, futures on the Dow were down 0.2%, the S&P 500 fell 0.3% while the Nasdaq dropped 0.5%.

It is still unknown who ordered the airstrike on the Al Ahli Arab hospital, which killed hundreds of staff and patients on Tuesday afternoon, with both Israeli and Palestinian authorities blaming each other for the attack.

US president Joe Biden on Wednesday touched down in Israel to step up diplomatic efforts through meetings with prime minister Benjamin Netanyahu – though he is now not travelling to Jordan to meet with Arab leaders after talks were called off.

Biden has thrown all his support behind the Israeli government, saying the hospital airstrike "appears to have been done by the other team" – comments that will likely raise tensions further with neighbouring nations.

"The explosion at a hospital in Gaza has quietly influenced the financial markets' reaction to the Israel-Hamas conflict," said Stephen Innes, managing partner at SPI Asset Management. "Initially, markets appeared to downplay the risk of a broader conflict. However, following the explosion, several key political leaders, including the Palestinian, Egyptian, and Jordanian leaders, cancelled meetings with US President Biden."

West Texas Intermediate crude was up 2.6% at $88.91 a barrel – a two-week high – on concerns that a prolonged conflict may impact oil supplies.

Meanwhile, the yield on a 10-year US Treasury closed at 4.846% on Tuesday, its highest closing level since July 2007, after stronger-than-expected US retail sales data raised expectations that the Federal Reserve will keep interest rates higher for longer.

Back on Wall Street, Wednesday will be another busy day for corporate earnings, with P&G, Morgan Stanley and US Bancorp all due to report before the opening bell; Netflix and Tesla results are due after the closing bell later on.