Stocks Pressured as Middle East Flare-Ups Boost Crude Oil

The S&P 500 Index ($SPX) (SPY) today is down -0.57%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.58%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.60%.  June E-mini S&P futures (ESM26) are down -0.50%, and June E-mini Nasdaq futures (NQM26) are down -0.52%.

Stock indexes are under pressure today, with the Nasdaq 100 falling from a new record high.  The broader market is under pressure today as the US and Iran clashed overnight, sending WTI crude oil prices up more than +1% to a 1.5-week high.  Shortly after disabling an empty oil tanker heading back to Iran, the US military said it came under missile and drone attacks as Iran targeted the US’s Bahrain naval base and the Ali Al-Salem airbase in Kuwait. US forces struck a communications tower on the Iranian island of Qeshm near the Strait of Hormuz as part of the skirmishes.  In addition, weakness in software companies and private credit stocks today is weighing on the overall market.

On the positive side, AI-infrastructure spending continues to support technology stocks.  Marvell Technology is up more than +6% today, adding to Tuesday’s 32% surge, to lead chipmakers higher after Nvidia CEO Huang predicted the company would be the next to hit a $1 trillion valuation, more than five times its current market capitalization. 

Signs of strength in the US labor market are also supportive of economic growth and stocks, after the May ADP employment change rose 122,000, slightly stronger than expectations of 120,000 and the biggest increase in 16 months.

US MBA mortgage applications fell -2.5% in the week ended May 29, with the purchase mortgage sub-index down -2.9% and the refinancing mortgage sub-index down -2.3%.  The average 30-year fixed rate mortgage fell -8 bp to 6.57% from 6.65% in the prior week.

The markets are discounting a 3% chance of a +25 bp rate hike at the next FOMC meeting on June 16-17.

The generally favorable Q1 earnings season is winding down.  As of today, 84% of the 485 S&P 500 companies that reported Q1 earnings have beaten estimates.  Q1 S&P 500 earnings are projected to climb +12% y/y, according to Bloomberg Intelligence.  Stripping out the technology sector, Q1 earnings are projected to increase around +3%, the weakest in two years.

Overseas stock markets are mixed today.  The Euro Stoxx 50 is down -0.63%.  China's Shanghai Composite closed up +0.22%.  Japan's Nikkei Stock Average rallied to a new record high and closed up +2.50%.

Interest Rates

September 10-year T-notes (ZNU6) today are down -10 ticks, and the 10-year T-note yield is up +4.5 bp to 4.489%.  T-note prices are under pressure today as an escalation of US-Iran tensions lifted WTI crude oil by more than +1% to a 1.5-week high, boosting inflation expectations.  T-notes added to their losses today after the May ADP employment change rose more than expected and posted its largest increase in 16 months, a hawkish factor for Fed policy.

European government bond yields moved lower on Tuesday.  The 10-year German Bund yield is up +3.5 bp to 3.009%.  The 10-year UK gilt yield is up +4.8 bp to 4.907%.

The Eurozone May S&P composite PMI was revised upward by +1.0 to 48.5 from the previously reported 47.5.

Eurozone Apr PPI rose +4.9% y/y, right on expectations and the fastest pace of increase in more than 3 years.

The UK May S&P services PMI was revised upward by +1.4 to 49.3 from the previously reported 47.9.

Swaps are discounting a 97% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.

US Stock Movers

Software stocks are sliding today, pressuring the broader market.  Atlassian Corp (TEAM) and Datadog (DDOG) are down more than -7%, and International Business Machines (IBM) is down more than -6% to lead losers in the Dow Jones Industrials.  Also, Oracle (ORCL) and ServiceNow (NOW) are down more than -5%, and Palantir Technologies (PLTR) is down more than -4%.  In addition, Workday (WDAY) and Salesforce (CRM) are down more than -3%, and Intuit (INTU), Autodesk (ADSK), and Adobe Systems (ADBE) are down more than -2%.

Private credit stocks are faltering today as the 17% redemption requests for Cliffwater’s private credit fund weighed on alternative asset stocks.  Ares Management (ARES) and Carlyle Group (CG) are down more than -4%, and Blackstone (BX), KKR & Co (KKR), and Blue Owl Capital (OWL) are down more than -3%.  Also, Apollo Global Management (APO) and BlackRock (BLK) are down more than -2%. 

Chipmakers and AI-infrastructure stocks are climbing today, providing support to the overall market. Intel (INTC) is up more than +7% to lead gainers in the S&P 500 and Nasdaq 100, and Western Digital (WDC) is up more than +5%.  Also, Advanced Micro Devices (AMD), Applied Materials (AMAT), and Seagate Technology Holdings Plc are up more than +2%.  In addition, Lam Research (LRCX), ON Semiconductor (ON), and ASML Holding NV (ASML) are up more than +1%. 

Gitlab (GTLB) is down more than -7% after announcing that it will cut about 14% of its workforce and exit 22 countries as part of a restructuring.

Ulta Beauty (ULTA) is down more than -6% after analysts noted the company’s annual guidance implies the outlook for the second half of the year is weaker than expected.

Palo Alto Networks (PANW) is down more than -5% despite reporting better-than-expected Q3 earnings, as it failed to meet elevated buy-side expectations.

GameStop (GME) is up more than +8% after reporting Q1 net sales rose +14% y/y to $835.3 million and said its board of directors approves a $2 billion share repurchase authorization. 

Marvel Technology (MRVL) is up more than +4% today, adding to Tuesday’s +32% surge, after Nvidia CEO Huang predicted that the company will be the next to hit a $1 trillion valuation, more than five times its current market capitalization. 

Medtronic Plc (MDT) is up more than +4% after reporting Q4 revenue of $9.81 billion, above the consensus of $9.64 billion.

IREN Ltd (IREN) is up more than +3% after signing a transmission connection agreement to support a planned 800-megawatt data center campus in Bundey, South Australia. 

Sherwin-Williams (SHW) is up more than +2% after the company and Nippon Paint abandoned efforts to jointly acquire Akzo Nobel. 

Earnings Reports(6/3/2026)

Broadcom Inc (AVGO), CrowdStrike Holdings Inc (CRWD), Five Below Inc (FIVE), Macy's Inc (M), Medtronic PLC (MDT), Ollie's Bargain Outlet Holding (OLLI), PVH Corp (PVH), Thor Industries Inc (THO), Veeva Systems Inc (VEEV).