OPENING CALL
Stock futures were taking a breather Wednesday as a record run for the major indexes faced another stern test in the form of escalating U.S.-Iran hostilities and AI spending concerns.
The U.S. said a ceasefire with Iran was holding despite the two countries trading heavy fire overnight . The intense fighting sent Brent crude above $98.
Still, the S&P 500 is looking to extend its winning streak to 10 consecutive days, which would be its longest since 1995.
"The market tone is still broadly upbeat, despite oil prices ticking higher as investors try to make heads or tails of what's going on in the Middle East," Hargreaves Lansdown said.
The AI rally could receive a boost from Broadcom later should the chip maker follow its peers in reporting strong earnings.
Clouding the picture for the rally, however, is concern over the earmarking by tech companies of unprecedented sums to finance the build-out of massive data centers .
On the data front, investors will look for the release of the ISM services index and ADP private payrolls out today, ahead of Friday's crucial jobs report.
Economic Insight
Federated Hermes said the probability of the Federal Reserve moving its key rate at the June 16-17 meeting is all but zero.
While rising inflation hasn't completely stifled consumer spending, concern is rising, the global investment manager said.
Standard Chartered said there was no visible case for an immediate interest-rate cut by the Fed , "but such a case could emerge over time."
Markets currently price in around 75% probability of a 25-basis-point Fed rate hike in September, according to LSEG.
Watch For:
ADP National Employment Report for May; ISM Report on Business Services PMI for May; EIA Weekly Petroleum Status Report; Federal Reserve Beige Book; Fed Governor Michael S. Barr speaks
Today's Top Headlines/Must Reads:
- Berkshire Hathaway and Japanese Builders See the Same Opportunity in U.S. Housing
- America's Data Center Build-Out Is Falling Way Behind Schedule
- OECD Warns of Severe Global Slowdown If Middle East Conflict Is Prolonged
MARKET WRAPS
Forex:
The dollar rose after the escalation of hostilities in the Persian Gulf.
The greenback was also supported by data showing U.S. job openings rose sharply in April, as well as comments from Cleveland Fed President Beth Hammack saying it could "soon be appropriate to act" to address elevated inflation.
The euro fell and could weaken further against the dollar if upcoming U.S. data are strong.
ING said Tuesday's job openings data boosted the dollar as markets consider a potential interest-rate rise by the Fed this year.
Sterling was lower against the dollar. Ebury said the current pricing on the pound seemed to underprice lingering political risk .
The Swiss franc was drifting lower against the euro this week as short-dated swap rate differentials moved against the exchange rate.
The dollar was a touch higher versus the offshore yuan.
LGT Private Banking Asia said the yuan likely remains an Asia outperformer .
Bonds:
Treasury yields rose following renewed tensions in the Middle East and resilient U.S. economic data.
"The lack of progress in U.S.-Iran negotiations, combined with fresh military exchanges across the region , continued to underpin safe-haven flows," DHF Capital said.
Standard Chartered said oil prices had effectively become the primary near-term directional driver of Treasury yields.
The Treasury market is focusing on inflation rather than growth risks from high oil prices.
Energy:
Oil prices climbed as hostilities in the Middle East escalated.
Diplomatic efforts to reopen the Strait of Hormuz and end the war have shown little progress after days of mixed messages from both sides .
Metals:
Gold futures fell as U.S.-Iran hostilities and rising crude prices fueled inflationary fears, raising prospects of higher interest rates.
The yellow metal was coming under pressure below the $4,500 an ounce level, as the market turned cautious ahead of the U.S. non-farm payrolls report due out this Friday.
"Without a clear signal from the data, gold is likely to continue trading in a consolidative pattern," XS said.
Aluminum
LME 3-month aluminum was higher. Commonwealth Bank of Australia said the price was likely to rise further if the Strait of Hormuz remained closed.
"As bauxite and alumina stockpiles dwindle, more Middle Eastern aluminum supply is expected to be curtailed ."
TODAY'S TOP HEADLINES
SpaceX Eyeing Roughly $1.75 Trillion Valuation in IPO Next Week
SpaceX is eyeing a valuation of around $1.75 trillion in its blockbuster initial public offering planned for next week, according to people familiar with the matter.
Elon Musk's rocket-maker is likely to sell under 5% of its shares-a much smaller portion than in a typical IPO-or roughly between $60 billion and $80 billion worth, the people said.
Baidu Sees Healthy AI-Driven Revenue Growth in Next Few Quarters
Baidu expects to list its chip unit in Hong Kong within this year, its finance chief said as he projected healthy revenue growth over the next few quarters, supported by artificial-intelligence income.
Henry He, chief financial officer of China's dominant search-engine operator, gave the timeline during an interview on Wednesday, signaling that plans to spin off and list the business in Hong Kong and Shanghai are on track.
Broadcom Stock Faces Earnings Test as AI Chip Revenue Surges
Broadcom will report second-quarter earnings on Wednesday afternoon amid supercharged growth in its AI chip business.
Wall Street analysts expect adjusted earnings per share of $2.40, up from $1.58 a year earlier, on revenue of $22.1 billion, a 47% increase. Both would be new records for the company. Sales and earnings growth are projected to accelerate through the remainder of the year, so investors will have a close eye on third-quarter guidance.
Greg Abel Puts His Stamp on Berkshire Hathaway With Pair of Megadeals
Greg Abel spent the past year trying to reassure investors that Berkshire Hathaway is still the willing and opportunistic dealmaker it had been under his predecessor, Warren Buffett.
He said the right things, but a prolonged slump in the company's stock showed that shareholders wanted action. In one weekend in late May, they got it.
U.S. and Iran Strikes Drive Up Oil Prices as Hormuz Fears Spike
Oil prices were rising early Wednesday as fighting flared between the U.S. and Iran, testing the ceasefire and progress toward a peace deal.
Brent crude futures, the international standard, were up 1.8% at $97.70 a barrel. West Texas Intermediate futures were rising 1.9% to $95.58 a barrel.
U.S. Proposes at Least 10% Tariffs on Partners After Probe Into Forced Labor
The U.S. has proposed tariffs of at least 10% on many trading partners following an investigation into goods allegedly produced by forced labor.
The Office of the U.S. Trade Representative said in a report released Tuesday that products of Canada, Mexico, Taiwan, the European Union and the U.K., among other countries, would face a 10% duty after its probe.
Warsh Names Two Conservative Policy Veterans as Interim Fed Advisers
Federal Reserve Chairman Kevin Warsh has tapped two outside associates to advise him while he settles into the job, one of whom previously helped write a conservative blueprint that recommended a radical restructuring of the central bank.
One adviser is Paul Winfree, according to people familiar with the matter. He was a White House domestic policy specialist in the first Trump administration. He was the named author of the chapter on the Federal Reserve in Project 2025, the conservative policy blueprint produced ahead of the 2024 election.
Hegseth Blocked Nine Air Force Senior Officer Promotions, Delayed Dozens More
Defense Secretary Pete Hegseth has blocked the appointment of nine Air Force colonels and delayed the promotion of at least two dozen more senior officers, according to current and former U.S. officials, in the latest instance of the Pentagon chief's unusual scrutiny of the military's senior ranks.
Hegseth's involvement in promotions across the military has raised concerns, the officials said, in the Pentagon and on Capitol Hill that the defense secretary is targeting certain officers for their race or gender, their association with the previous administration's diversity, equity and inclusion policies, or for being insufficiently loyal. The identities of the nine Air Force officers overlooked for promotion couldn't be determined.
Write to gareth.mcpherson@wsj.com
TODAY IN CANADA
Earnings:
Canaccord Genty 4Q
Descartes Sys. 1Q
Transcontinental 2Q
VersaBank 2Q
Economic Indicators $(ET)$:
0815 Official International Reserves Monetary Reserves $(USD)$ for May
0830 Labour productivity, hourly compensation & unit labour cost Q1
0930 Canada Services PMI for May
Stocks to Watch:
D-Box Technologies 4Q Rev C$14.7M; 4Q EPS C$0.01
Highwood Asset Management to Sell Wilson Creek Assets to Obsidian Energy; to Use Consideration to Reduce Debt, Improving Balance Sheet and Liquidity
Yangarra Resources Expects to Bring on Eight New Wells, Including Six Belly River Wells, by July
Other News:
U.S., Canada Exchange Proposals to Move Trade Talks Back to Higher Gear
Expected Major Events for Wednesday
00:30/JPN: May Japan Services PMI
06:00/RUS: May Russian Services PMI
07:45/ITA: May Italy Services PMI
07:50/FRA: May France Services PMI
07:55/GER: May Germany Services PMI
08:30/UK: May UK Official Reserves
08:30/UK: May S&P Global UK Services PMI
08:30/UK: May Narrow money (Notes & Coin) and reserve balances
11:00/US: 05/29 MBA Weekly Mortgage Applications Survey
(MORE TO FOLLOW) Dow Jones Newswires
June 03, 2026 06:01 ET (10:01 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments