Futures curbed early gains and retreated after a positive session on U.S. stock market, where strong economic numbers helped spur some risk appetite

U.S. stock index futures dropped on late-Wednesday after a surge in oil prices sparked renewed concerns over the inflationary impact of the U.S.-Iran war.

Futures curbed early gains and retreated after a positive session on U.S. stock market, where a host of strong economic numbers and reports of Iran seeking more dialogue helped spur some risk appetite.

But Iran denied it had sought more talks with Washington, sending oil prices up sharply during the Asian session on Thursday. Brent and WTI futures soared between 3% and 4%

S&P 500 Futures dropped 0.16% to 6,869.50 points by 04:43 GMT. Nasdaq 100 Futures declined 0.16% to 25,085.75 points, while Dow Jones Futures shed 0.3% to 48,649.0 points.

Energy-driven inflation has been a key point over the Iran war, especially as action in the Strait of Hormuz disrupted oil supplies for a large portion of the globe, driving up commodity prices.

This in turn fuelled concerns that a prolonged war will keep energy prices high, driving up inflation and eliciting a more hawkish stance from global central banks.

Oil’s Thursday surge also came shortly after Iranian officials denied that they had reached out to Washington to discuss a de-escalation.

Broadcom Inc advanced more than 5% in aftermarket trade after it beat both top and bottom-line expectations with its fiscal first quarter earnings.

The company also forecast second quarter revenue of $22 billion, ahead of $20.4 billion, with nearly half of the figures to come from sales of its advanced AI chips.

Broadcom’s earnings helped spur some confidence that the AI trade remained in play, with chipmakers in particular set to continue benefiting from the industry.

Rival NVIDIA Corporation added 0.3% in aftermarket trade. The company’s CEO, Jensen Huang, said earlier on Wednesday that AI-fuelled chip demand was “higher than very high.”

Software major CrowdStrike Holdings Inc gained more than 4% on Wednesday after the software developer clocked stronger-than-expected quarterly earnings, helping cool some concerns over AI-related disruptions in the enterprise software industry.