Futures drop as Middle East tensions simmer, Netflix slumps

US stock index futures fell on Friday as investors turned risk-averse following reports of an escalation in the Middle East conflict, while Netflix dropped after the company forecast current-quarter revenue below estimates.

Israel launched an attack on Iranian soil on Friday, sources said, in the latest tit-for-tat exchange between the two arch foes, whose decades of shadow war broke out into the open and threatened to drag the region deeper into conflict.

The CBOE Volatility index, also known as Wall Street's “ fear gauge”, was up 1.42 points at 19.42, its highest level in more than five months.

"One mistake that causes casualties or hits an unexpected target could trigger an escalation in reprisals and a deeper, more dangerous situation in the Middle East," Kathleen Brooks, research director at XTB, said in a note.

"This is why volatility is likely to stick around, especially as it comes at a delicate time for financial markets as they recalibrate expectations for interest rate cuts."

On the earnings front, Netflix slumped 6.4% in premarket trading following the streaming video pioneer's lackluster second-quarter forecast.

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