Stock futures fell and oil prices rose in overnight trading after an Israeli missile hit Iran following Iran's retaliatory attack on the country last weekend.
Investors are closely watching conflicts in the Middle East for signs that escalating hostilities between Israel and Iran are threatening global oil supplies and pushing up energy prices.
Crude oil prices rose to their highest level in months after Iran attack with drones and missiles in Israel on April 13, it topped $90 early Friday before giving up those gains amid signs that the Iranian government was downplaying the impact of the Israeli strike.
S&P 500 stock futures fell 0.6 percent, while the Dow Jones Industrial Average and Nasdaq Composite fell 0.5 percent and 0.7 percent, respectively.
“While geopolitics will remain present in this market for some time … we believe the events of the last 12 hours in Iran are encouraging as they will help cool tensions between Israel and Tehran, at least for now,” , Vital Knowledge's Adam Crisafulli said in a note to investors.
In oil trading, benchmark U.S. crude was up 11 cents at $82.22 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, gained 7 cents to $87.18 a barrel.
“The attack, and the threat of retaliation, has increased the risk to the physical supply of oil, but this morning's response suggests that some of that risk has already been priced in,” Neil Shearing, chief economist of the group, from Capital Economics. , he said in a report.
There are a number of factors drove up gas prices in the U.S. over the past month, with the national average for a gallon of regular now at $3.67, up 21 cents from a month ago, according to AAA. Fuel costs tend to rise around this time of year as more motorists hit the road and oil refineries take advantage of milder weather to perform necessary maintenance, which can limit supplies.
While wars in the Middle East and Ukraine have oil investors on edge, AAA doesn't expect domestic gas prices to rise for now, pointing to a drop in fuel demand between the end of the holidays spring break in the United States and the Memorial Day holiday.
—The Associated Press contributed to this report.
