The S&P 500 Index ($SPX) (NYSE: SPY) is down -0.57%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.58%, and the Nasdaq 100 Index ($IUXX) (NASDAQ: QQQ) is down -0.60% on Wednesday.
June E-mini S&P futures (ESM26) are down -0.50%, and June E-mini Nasdaq futures (NQM26) are down -0.52% in midday trading.
The Nasdaq 100 fell from a new record high as overnight US-Iran military skirmishes sent 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, further escalating geopolitical tensions.
Weakness in software companies and private credit stocks is adding to broader market pressure on Wednesday, compounding losses driven by the Middle East conflict.
On the positive side, AI-infrastructure spending continues to support technology stocks, with chipmakers posting notable gains amid optimism over future demand.
Marvell Technology (NASDAQ: MRVL) is up more than +6% today, adding to Tuesday’s 32% surge, 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 providing some support, 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 basis points to 6.57% from 6.65% in the prior week, offering modest relief to prospective homebuyers.
Markets are discounting a 3% chance of a +25 basis point rate hike at the next FOMC meeting on June 16-17, suggesting traders see little likelihood of near-term tightening.
As of Wednesday, 84% of the 485 S&P 500 companies that reported Q1 earnings have beaten estimates, with Q1 S&P 500 earnings projected to climb +12% year-over-year according to Bloomberg Intelligence.
Stripping out the technology sector, Q1 earnings are projected to increase around +3%, the weakest in two years, highlighting the market’s continued dependence on tech outperformance.
Software stocks are sliding broadly, with Atlassian Corp (NASDAQ: TEAM) and Datadog (NASDAQ: DDOG) down more than -7%, and International Business Machines (NYSE: IBM) down more than -6% to lead Dow Jones losers.
Oracle (NYSE: ORCL) and ServiceNow (NYSE: NOW) are down more than -5%, while Palantir Technologies (NASDAQ: PLTR) is down more than -4% in Wednesday’s session.
Private credit stocks are faltering after 17% redemption requests for Cliffwater’s private credit fund weighed on alternative asset managers across the sector.
Ares Management (NYSE: ARES) and Carlyle Group (NASDAQ: CG) are down more than -4%, while Blackstone (NYSE: BX), KKR & Co (NYSE: KKR), and Blue Owl Capital (NYSE: OWL) are each down more than -3%.
Intel (NASDAQ: INTC) is up more than +7% to lead gainers in the S&P 500 and Nasdaq 100, while Western Digital (NASDAQ: WDC) is up more than +5% as chipmakers rally.
GitLab (NASDAQ: GTLB) is down more than -7% after announcing it will cut about 14% of its workforce and exit 22 countries as part of a restructuring effort.
GameStop (NYSE: GME) is up more than +8% after reporting Q1 net sales rose +14% year-over-year to $835.3 million, with its board approving a $2 billion share repurchase authorization.
Medtronic Plc (NYSE: MDT) is up more than +4% after reporting Q4 revenue of $9.81 billion, above the analyst consensus of $9.64 billion.
Overseas, Japan’s Nikkei Stock Average rallied to a new record high, closing up +2.50%, while the Euro Stoxx 50 fell -0.63% and China’s Shanghai Composite closed up +0.22%.
