S&P Futures Muted as Fresh U.S.-Iran Hostilities Lift Oil and Bond Yields, ADP Jobs Report and Broadcom Earnings on Tap

June S&P 500 E-Mini futures (ESM26) are trending down -0.05% this morning as oil prices and bond yields climbed after the U.S. and Iran exchanged heavy fire in the Persian Gulf.

The price of WTI crude climbed over +2% on Wednesday amid skepticism over the prospects of a U.S.-Iran peace deal and as renewed fighting erupted in the Middle East. The U.S. Central Command said in a post on X that American forces successfully intercepted Iranian ballistic missiles and drones, and conducted self-defense strikes on Qeshm Island in response to attempted attacks by Iran across the Middle East. Iran’s attacks followed a U.S. strike on an empty oil tanker that the U.S. said was attempting to breach its blockade. Meanwhile, the Trump administration said the ceasefire between the U.S. and Iran remains in place.

Treasuries fell across the curve as higher oil prices fueled worries about inflationary pressures, with the benchmark 10-year yield rising four basis points to 4.49%.

“Market pessimism once again grows over the prospects of a U.S.-Iran deal that could pave the way for a reopening of the Strait of Hormuz,” according to Saxo Bank analysts. Still, “for now, the risk premium continues to be partly offset by President Trump’s repeated insistence that an interim agreement remains within reach.”

The Organisation for Economic Co-operation and Development said on Wednesday that the global economy is poised for a marked slowdown this year as higher energy costs weigh on consumer spending and business investment, but it could worsen significantly if the Middle East conflict extends into 2027.

Investors are now awaiting a fresh batch of U.S. economic data, with particular attention on the ADP employment report, and an earnings report from semiconductor giant Broadcom.

In yesterday’s trading session, Wall Street’s major indexes ended in the green, with the S&P 500, Dow, and Nasdaq 100 posting new record highs. Hewlett Packard Enterprise (HPE) surged over +19% and was the top percentage gainer on the S&P 500 after the information technology company posted upbeat FQ2 results and raised its full-year revenue growth guidance amid surging AI-driven demand for its servers and networking products. Also, Marvell Technology (MRVL) jumped more than +32% and was the top percentage gainer on the Nasdaq 100 after Nvidia CEO Jensen Huang said it would be the next chipmaker to reach a trillion-dollar valuation. In addition, Microchip Technology (MCHP) climbed over +5% after the company provided a strong full-year data center revenue forecast. On the bearish side, Intuit (INTU) slumped over -8% and was among the top percentage losers on the S&P 500 after Goldman Sachs downgraded the stock to Sell from Neutral with a price target of $276.

Economic data released on Tuesday showed that U.S. JOLTS job openings unexpectedly jumped to a near 2-year high of 7.618 million in April, stronger than expectations of 6.860 million.

“The jobs market continues to hold its ground. There’s hope that energy prices will retreat after a geopolitically charged surge in the first quarter, allowing the Fed to stay on hold while inflation eases in the second half of the year. Pair that with rising earnings expectations, and it could help propel stock prices higher,” said Bret Kenwell at eToro.

Cleveland Fed President Beth Hammack said on Tuesday that it makes sense to keep interest rates unchanged for now, given uncertainties about the economic outlook. However, Hammack said she remains concerned about inflation, which has been above the Fed’s target for more than five years, adding that “if recent data trends continue, it may soon be appropriate for policy to act to address the growing risks of persistently elevated inflation.”

U.S. rate futures have priced in a 98.4% chance of no rate change and a 1.6% chance of a 25 basis point rate cut at June’s monetary policy meeting.

Meanwhile, the Office of the U.S. Trade Representative on Tuesday proposed a new tariff of at least 10% on imports from 60 trading partners, as President Trump looks to restore the sweeping tariff wall struck down by the U.S. Supreme Court. The recommended duties stem from an investigation into how trade partners address goods allegedly made with forced labor.

Today, investors will focus on the U.S. ADP private payrolls report, which is set to be released in a couple of hours. Economists, on average, forecast that the May ADP Nonfarm Employment Change will stand at 118K, compared to 109K in April.

The U.S. ISM Non-Manufacturing PMI and S&P Global Services PMI will also be closely monitored today. Economists expect the May ISM services index to be 53.7 and the S&P Global services PMI to be 51.0, compared to the previous values of 53.6 and 51.0, respectively.

U.S. Factory Orders data will be reported today. Economists project factory orders to climb +4.6% m/m in April after the +1.5% m/m gain a month earlier.

The EIA’s weekly crude oil inventories report will be released today as well. Economists expect this figure to be -2.9 million barrels, compared to last week’s value of -3.3 million barrels.

In addition, market participants will parse comments today from Fed Governor Michael Barr and Dallas Fed President Lorie Logan.

Later today, the Fed will release its Beige Book survey of regional business contacts, which provides an update on economic conditions in each of the 12 Fed districts. The Beige Book is published two weeks before each meeting of the policy-setting Federal Open Market Committee.

On the earnings front, prominent companies such as Broadcom (AVGO), CrowdStrike Holdings (CRWD), and Veeva Systems (VEEV) are slated to release their quarterly results today.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.49%, up +0.99%.

The Euro Stoxx 50 Index is down -0.36% this morning as fresh hostilities in the Middle East and signs of stress in private credit markets weighed on sentiment. Financial services stocks led the declines on Wednesday, with Partners Group (PGHN.Z.EB) plunging over -17% after Bloomberg reported that the Swiss investment manager had restricted redemptions in one of its “evergreen” private equity funds. Automobile stocks also slumped. Sentiment was also dampened by the threat of new U.S. tariffs. The U.S. Trade Representative’s office on Tuesday proposed slapping an additional 10% duty on imports from the European Union following a probe into goods allegedly made with forced labor. A senior EU lawmaker on Wednesday dismissed U.S. claims that the bloc was not curbing trade in goods made with forced labor as “utterly absurd,” adding that any new U.S. tariffs would be unacceptable. Meanwhile, a survey released on Wednesday showed that Eurozone private-sector activity contracted at the fastest pace in 18 months in May as weakening demand for goods and services pulled output lower for a second straight month, while cost pressures climbed to their highest level in more than three years. “With business activity in the Eurozone falling for a second successive month in May, it is looking increasingly likely that the economy will slip into contraction in the second quarter,” said Chris Williamson at S&P Global Market Intelligence. In other corporate news, Inditex (0QWI.LN) climbed over +3% after the Zara owner posted strong early summer sales.

Eurozone’s Composite PMI, Eurozone’s Services PMI, and Eurozone’s PPI data were released today.

Eurozone’s May Composite PMI came in at 48.5, stronger than expectations of 47.5.

Eurozone’s May Services PMI stood at 47.7, stronger than expectations of 46.4.

Eurozone’s April PPI rose +0.6% m/m and +4.9% y/y, compared to expectations of +0.6% m/m and +4.8% y/y.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.22%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +2.50%.

China’s Shanghai Composite Index closed higher today, led by gains in the tech sector. Optical and semiconductor stocks outperformed on Wednesday amid optimism about AI growth. Suzhou TFC Optical Communication climbed over +8% and Zhongji Innolight rose about +7%, tracking overnight gains in their U.S. peers as this week’s Computex conference in Taipei further fueled investor enthusiasm for the AI supply chain. Bloomberg-compiled data showed that Chinese investors are pulling out of Hong Kong-listed stocks in record amounts, with Goldman Sachs noting that flows are increasingly shifting to mainland-listed semiconductor and other AI-related shares. A private-sector survey released on Wednesday showed that China’s services activity grew at the fastest pace in three months in May, helped by improvements in new business and domestic demand. The reading was largely in line with an official survey released on Sunday, which showed that services activity returned to expansionary territory following a contraction in April. Meanwhile, China’s central bank reduced the size of its daily liquidity operations to zero for the first time in almost two years on Wednesday. Economists said the move reflected ample liquidity in the market amid weak loan demand. Elsewhere, Reuters reported on Wednesday that Chinese AI startup DeepSeek is poised to raise about 50 billion yuan ($7.4 billion) in its first funding round from investors including Tencent Holdings and CATL.

The Chinese May RatingDog Services PMI came in at 54.4, stronger than expectations of 52.3.

Japan’s Nikkei 225 Stock Index closed sharply higher today, topping the 68,000 mark for the first time as demand for AI-related stocks intensified. Chip stocks jumped on Wednesday, tracking overnight gains in their U.S. peers. Chip-making equipment maker Tokyo Electron jumped over +13% and semiconductor testing equipment maker Advantest climbed more than +5%, together boosting the Nikkei by 1,046 points. Financial and metal stocks also posted solid gains. Japanese government bond yields climbed on Wednesday amid concerns about the nation’s fiscal health and mounting inflationary risks. Japan’s cabinet on Wednesday approved a supplementary budget of about $19.0 billion for this fiscal year to ease the impact of rising energy costs on households amid the risk of a prolonged Middle East conflict. The budget will be funded through deficit-financing bonds, though the borrowing will be largely offset by stronger tax revenue. Meanwhile, Bank of Japan Governor Kazuo Ueda on Wednesday signaled there is a good possibility of a rate hike this month, though his remarks were less explicit than those he made ahead of the previous two increases. On the economic front, a survey showed on Wednesday that Japan’s services sector stalled in May after more than a year of expansion, as soaring costs tied to the Middle East conflict curbed service demand and pushed output price inflation to a 12-year high. Investor attention for the remainder of the week is on Japan’s April wage data for indications that pay gains are broadening sufficiently to sustain domestic demand. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -12.98% to 29.31.

The Japanese May S&P Global Services PMI remained unrevised at 50.0, in line with expectations.

Pre-Market U.S. Stock Movers

Marvell Technology (MRVL) surged over +11% in pre-market trading, extending yesterday’s gains after Nvidia CEO Jensen Huang said it would be the next chipmaker to reach a trillion-dollar valuation.

Other chip stocks also climbed in pre-market trading, with Intel (INTC) rising more than +5% and Advanced Micro Devices (AMD) gaining over +3%.

GameStop (GME) climbed more than +9% in pre-market trading after the video game retailer reported strong Q1 results and announced that its board had authorized a $2 billion share buyback program.

Software stocks fell in pre-market trading, with Atlassian Corp. (TEAM) and Workday (WDAY) dropping more than -2%.

AT&T (T) fell over -1% in pre-market trading after Oppenheimer downgraded the stock to Perform from Outperform.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - June 3rd

Broadcom (AVGO), CrowdStrike Holdings (CRWD), Medtronic (MDT), Veeva Systems (VEEV), Five Below (FIVE), Macy’s (M), Netskope (NTSK), Ollie’s Bargain Outlet Holdings (OLLI), PVH Corp. (PVH), THOR Industries (THO), MiniMed Group (MMED), C3.ai (AI), Sprinklr (CXM), IDT Corporation (IDT), Petco Health and Wellness Company (WOOF), ChargePoint Holdings (CHPT), Tilly's (TLYS), Rent the Runway (RENT).