Equities Fall Intraday, Oil Jumps Amid Renewed Middle East Tensions

US benchmark equity indexes were lower intraday, while oil prices rose amid renewed hostilities in the Middle East.

The Nasdaq Composite was down 1% at 26,816.5 after midday Wednesday, while the Dow Jones Industrial Average fell 0.9% to 50,858.1. The S&P 500 shed 0.6% to 7,562.9. The indexes logged fresh closing highs in the previous session.

Among sectors, technology and consumer discretionary saw the biggest decline intraday Wednesday, while energy paced the gainers.

Several major tech names were falling sharply, with IBM (IBM) down 6.1%, the steepest decline on the Dow. Salesforce (CRM), Microsoft (MSFT), and Nvidia (NVDA) followed IBM on the index.

West Texas Intermediate crude oil was up 2.6% at $96.17 a barrel, while Brent rose 2.1% to $98.04.

"Crude oil is trading higher for a third consecutive session, with Brent pushing above $97 as market pessimism once again grows over the prospects of a US-Iran deal that could pave the way for a reopening of the Strait of Hormuz," Saxo Bank said in a report.

Iran launched strikes targeting US bases in Kuwait and Bahrain, as well as a vessel near the Strait of Hormuz, CNN reported. On Tuesday, the US Central Command said it conducted self-defense strikes on Qeshm Island in response to attempted attacks by Iran across the Middle East.

A barrage of ballistic missiles and drones hit Kuwait Wednesday, shutting its international airport, killing one person and injuring dozens, The Wall Street Journal reported.

US President Donald Trump reportedly said in a podcast with the New York Post that Iran has agreed not to have nuclear weapons, but Tehran could still change its mind. Previously, Trump said that negotiations with Iran were continuing, despite Iranian state-affiliated outlet Tasnim reporting that the country had suspended talks with Washington.

"For now, the risk premium continues to be partly offset by President Trump's repeated insistence that an interim agreement remains within reach," Saxo said.

In economic news, the Organization for Economic Co-operation and Development lowered its global economic growth projection for 2026, cautioning that the fallout from the Middle East conflict may linger for some time even after its resolution.

In the US, employment in the private sector increased more than expected in May, ADP (ADP) data showed.

"The breadth of gains was encouraging, with almost all sectors increasing payrolls during the month," Oxford Economics said in a note. "Coupled with weak labor supply growth, the strong gains in payrolls would reduce the upside risk to the unemployment rate."

Data from the Bureau of Labor Statistics are expected to show Friday that the US economy added 85,000 nonfarm jobs last month, which would represent a fall from a 115,000 increase reported for April, according to a Bloomberg-compiled survey. The unemployment rate is seen unchanged at 4.3%.

"The combination of resilient demand and intensifying cost pressures reinforces the risk of ongoing price pass-through, suggesting that the (Federal Reserve) is likely to remain patient on policy easing given limited progress on services disinflation and increasing the likelihood of rate hikes this year," TD Economics said in a note.

US Treasury yields were higher intraday, with the 10-year rate up 3.8 basis points at 4.49%, and the two-year rate rising 3.3 basis points to 4.08%.

In company news, Medtronic (MDT) reported better-than-expected fiscal fourth-quarter results, while the medical-device maker projected earnings and organic revenue growth for the current year. The company's shares were up 5.1%, among the best performers on the S&P 500.

Broadcom (AVGO), CrowdStrike (CRWD), Veeva Systems (VEEV) and Five Below (FIVE) are expected to report after the closing bell Wednesday, along with others.

Gold was down 1.2% at $4,465.10 per troy ounce, while silver fell 2.6% to $73.58 per ounce.

ISM Services Survey Shows Faster Expansion; S&P Data Indicate Growth Deceleration

The US services sector saw continued expansion in May, with Institute for Supply Management data showing a faster growth rate sequentially, but S&P Global (SPGI) pointing to a deceleration.The ISM's purchasing managers' index rose to 54.5 last month from 53.6 in April. The consensus was for a 53.8 print in a survey compiled by Bloomberg. A reading above 50 indicates the services sector economy is generally expanding.The business activity index rose to 57.7 in May from 55.9 the month before, while the gauge for new orders increased to 57.3 from 53.5. The employment measure ticked lower to 47.9 from 48 and remained in contraction for a third consecutive month, the ISM survey showed."Respondents commented frequently that their companies had instituted hiring freezes or were not backfilling vacated positions, however, most industries reported that they were holding flat in employment month over month," Steve Miller, chair of the ISM's services business survey committee, said.The price index increased to 71.3 last month from 70.7 in April, marking its highest level since August 2022, according to the ISM survey."The combination of resilient demand and intensifying cost pressures reinforces the risk of ongoing price pass-through, suggesting that the (Federal Reserve) is likely to remain patient on policy easing given limited progress on services disinflation and increasing the likelihood of rate hikes this year," TD Economics Senior Economist Vikram Rai said in a note.Separately, S&P Global said its services PMI gauge fell to 50.7 in May from 51 the month prior, describing the latest expansion as "among the weakest" in the last 2.5 years. The impact of increasing prices, especially for fuel and energy, "stunted" growth in new business intakes, the data provider said. Employment fell at its fastest pace in six years, while business optimism reached the lowest since October 2022, the report showed.Consumer-facing sectors were the hit the hardest, with corresponding orders falling at the steepest pace since the coronavirus pandemic in 2020, S&P Global Market Intelligence Chief Business Economist Chris Williamson said."The increase in input cost inflation being signaled by the PMI points to a further rise in consumer price inflation in the coming months, but on the other hand the weakening of demand growth and downturn in the labor market being indicated could help allay concerns over any inflation spike becoming more entrenched," Williamson said.On Monday, separate surveys by the ISM and S&P showed that the US manufacturing sector expanded to its highest level in four years in May amid strength in demand and production, though price pressures remained elevated.Price: $410.17, Change: $-7.29, Percent Change: -1.75%

$SPGI

May Private Sector Hiring Rises More Than Expected, ADP Data Show

Employment in the US private sector increased more than expected in May, ADP (ADP) data showed Wednesday, ahead of the official jobs report for the month due later in the week.Private jobs advanced by 122,000 last month, according to the payrolls processing firm. The consensus was for a 120,000 increase in a Bloomberg-compiled survey. The number of jobs added in April was revised down to 105,000 from 109,000."Hiring was more broad-based in May than we've seen in the last few years," ADP Chief Economist Nela Richardson said. "The labor market continues to show sustained momentum going into the summer hiring season."The services sector added 114,000 jobs last month, led by a 57,000 jump in education and health services, ADP said. The information sector saw a 9,000 drop in roles. Employment in the goods-producing sector grew by 8,000."The breadth of gains was encouraging, with almost all sectors increasing payrolls during the month," Oxford Economics Senior US Economist Matthew Martin said in remarks emailed to. "Coupled with weak labor supply growth, the strong gains in payrolls would reduce the upside risk to the unemployment rate."Data from the Bureau of Labor Statistics are expected to show Friday that the US economy added 85,000 nonfarm jobs in May, which would represent a fall from a 115,000 increase reported for April, according to a Bloomberg-compiled survey. The unemployment rate is seen unchanged at 4.3%.Annual wage growth slowed to 6.5% in May from 6.6% in April for job changers, while compensation gains were steady at 4.4% for job stayers, the ADP report showed.The ADP report is "slightly at odds" with the Job Openings and Labor Turnover Survey released Tuesday, according to Martin. That survey showed job openings hitting their highest level in almost two years in April, although hiring and layoffs fell."While the full impacts of the war in Iran on the labor market haven't fully fed through, recent labor market data will allow the Federal Reserve to be patient in setting policy and remain on hold until December," Martin said.US President Donald Trump reportedly said in a podcast with the New York Post that Iran has agreed not to have nuclear weapons, but Tehran could still change its mind. Previously, Trump said in a social media post that negotiations with Iran were continuing, despite state-affiliated outlet Tasnim reporting that Iran had suspended talks with Washington.Price: $225.84, Change: $-5.34, Percent Change: -2.31%

$ADP

Ollie's Bargain Lifts Full-Year Earnings Guide, Trims Revenue Outlook

Ollie's Bargain Outlet (OLLI) raised its full-year earnings outlook on Wednesday, while the discount retailer trimmed its revenue expectations.The company raised its fiscal 2026 adjusted earnings guidance to between $4.45 and $4.55 per share from $4.40 to $4.50 previously projected. Analysts polled by FactSet expect $4.44 per share.Ollie's revenue is pegged at $2.98 billion to $3 billion, compared with the prior outlook that called for $2.985 billion to $3.013 billion. Wall Street is modeling for $3 billion."We are cognizant of the state of the consumer right now," Chief Financial Officer Robert Helm said during an earnings call, according to a FactSet transcript. "They are prioritizing their spending around their needs and driving a little less if they can. Weather is still a bit of a lingering factor and we don't have the benefit of higher tax refunds to offset some of these pressures in the second quarter."Gasoline prices in the US have surged as the Iran war pushed crude oil costs higher due to the near-complete closure of the Strait of Hormuz.Dollar General (DG), Dollar Tree (DLTR), TJX (TJX) and Burlington Stores (BURL) recently raised their full-year earnings guidance.Shares of Ollie's rose 0.9% intraday Wednesday. The stock is down 27% so far this year.For the first quarter ended May 2, adjusted EPS rose to $0.91 from $0.75 a year earlier, ahead of the Street's $0.87 estimate. Sales jumped 14% to $658.9 million, but fell short of the FactSet consensus of $661.7 million.Comparable sales grew 1.7%, decelerating from the prior-year quarter's 2.6% rise but topping analysts' 1.6% growth view."Our comp target remains a positive 2% for the full fiscal year," Helm told analysts. "Our current trends are running below this level, primarily reflecting continued weather volatility and ongoing pressure on the lower income consumer."Wall Street expects Ollie's full-year comparable sales to increase 1.7%.Price: $79.44, Change: $+0.19, Percent Change: +0.24%

$BURL$DG$DLTR$OLLI$TJX

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