FINWIRES · TerminalLIVE
FINWIRES

Wall Street Snaps Record Rally Amid Re-Escalation in Middle East Conflict

By
Wall Street Snaps Record Rally Amid Re-Escalation in Middle East Conflict

US equities snapped their record-setting rally on Wednesday as renewed hostilities in the Middle East lifted oil prices.

The Nasdaq Composite fell 0.9% to 26,854 and the S&P 500 declined 0.7% to 7,553.7, closing lower following a nine-day advance. The Dow Jones Industrial Average lost 1.2% to 50,687.1. All indexes logged fresh record highs on Tuesday.

Six of the 11 sectors ended in the red, led by technology, while energy paced the gainers.

Several major tech names fell sharply, with IBM (IBM) down 7.2%, the steepest decline on the Dow. Salesforce (CRM) followed IBM on the index, shedding 5.1%. Nvidia (NVDA) declined 3.6%, among the worst performers on the Dow.

ServiceNow (NOW) and Microsoft (MSFT) also logged declines.

West Texas Intermediate crude oil was up 2.6% at $96.19 a barrel in Wednesday late-afternoon trade, while Brent rose 2.1% to $97.99.

"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.

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.

"Oil is up again as only Trump appears to believe that a 'deal' to end the war is in the works," said Derek Holt, head of capital markets economics at Scotiabank.

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 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. Both surveys indicated elevated cost pressures and signs of weakness in the labor market.

Most Federal Reserve districts saw slight to moderate growth in economic activity since mid-April, while consumer spending remained mixed, the US central bank said in its latest Beige Book released Wednesday.

"Higher-income households remained resilient and less sensitive to price increase, while middle-income households were described as 'squeezing more life out of every dollar before deciding to spend it,' and low-income consumers showed greater financial strain," according to the latest document, prepared by the Kansas City Fed based on data collected by May 27.

US Treasury yields were higher, with the 10-year rate last up 4.6 basis points at 4.49%, and the two-year rate rising 3.8 basis points to 4.09%.

Gold was last down 1% at $4,476.40 per troy ounce, while silver fell 2.5% to $73.65 per ounce.

Related Articles

Vietnam's Inflation Accelerates to 5.6% in May on Higher Utility, Fuel Costs
US Markets

Vietnam's Inflation Accelerates to 5.6% in May on Higher Utility, Fuel Costs

Vietnam's consumer price index rose 5.6% in May from a year earlier, according to data released by the National Statistics Office on Wednesday.Housing, electricity, water, fuel, and construction materials recorded the largest monthly increase among major categories, rising 0.96% from April.The quickening of inflation was "due to rising electricity and water prices, coupled with high demand during hot weather, as well as increases in construction material prices, rental housing prices, and gasoline prices," the statistics office said in a statement.Core inflation, which excludes volatile items, increased 4.67% from a year earlier.For the first five months of 2026, consumer prices increased 4.31% from a year earlier, while average core inflation rose 4.04%.The inflation pickup comes as higher global energy prices linked to the conflict in Iran continue to filter through transportation, services, and construction-related costs.Vietnam's Finance Ministry said in April that inflation could reach as high as 5.5% this year, with the conflict in Iran expected to be a key driver of higher consumer prices through its impact on energy and transportation costs.The outlook has also been clouded by mounting trade tensions with the United States. In late May, Washington launched a new investigation into Vietnam's intellectual property protection and enforcement practices, the third U.S. trade probe targeting the country in as many months.The investigation could pave the way for additional tariffs on Vietnamese exports, adding pressure on the export-dependent economy.Vietnam's Foreign Ministry said it hoped the U.S. would conduct an "objective and fair assessment" that fully recognizes Vietnam's efforts and achievements, according to a statementMeanwhile, Vietnam's trade deficit widened to a record $5.21 billion in May as imports surged amid rising global raw material prices and stronger demand for production inputs.

^HNX^HOSE
Hong Kong's Private Sector Returns to Growth in May, S&P Global Says
US Markets

Hong Kong's Private Sector Returns to Growth in May, S&P Global Says

Hong Kong's private sector returned to growth in May, supported by stronger export demand and a modest increase in new orders, S&P Global said Wednesday.The seasonally adjusted S&P Global Hong Kong SAR Purchasing Managers' Index rose to 50.4 in May from 48.6 in April.The reading moved back above the 50-point threshold that separates expansion from contraction and marked the first improvement in business conditions in three months.Business activity expanded modestly during the month, with construction emerging as the strongest-performing sector.New orders also returned to growth territory, supported by stronger overseas demand, while export orders recorded their fastest increase in three months.Some firms attributed higher sales to new product launches, although others continued to report weak domestic demand and intense competition.Usamah Bhatti, economist at S&P Global Market Intelligence, attributed the return to growth to modest increases in business activity and new orders, supported by stronger overseas demand despite ongoing weakness in local market conditions.Despite the recovery in demand, employment continued to decline as firms reported sufficient capacity to handle workloads and chose not to replace departing staff.Firms also reported a deterioration in supplier performance, with some linking delivery delays to shipping disruptions caused by the conflict in the Middle East.Cost pressures remained elevated during the month. Purchasing costs rose at the fastest pace since December 2021, driven largely by higher raw material prices, particularly fuel-related products.Many firms passed higher costs on to customers through price increases, although some offered discounts to support sales, resulting in a slower pace of output price inflation than in April.Looking ahead, firms remained pessimistic about business prospects over the next 12 months, although negative sentiment eased to a three-month low.The survey's elevated cost pressures come as Hong Kong officials expect inflation to accelerate in the coming months.Hong Kong's annual inflation rate stood at 1.7% in April, unchanged from the previous two months and the highest level since May last year.Financial Secretary Paul Chan Mo-po said the Middle East conflict has so far had only a limited impact on local inflation, citing Hong Kong's service-based economy and stable energy supplies from mainland China."Rising international oil prices will continue to feed through to consumer prices and fuel-related products," Chan told lawmakers on Monday."However, as Hong Kong is a service-oriented economy with relatively low energy dependency, and with stable energy supplies from the mainland, the external impact can be mitigated," he added.The government revised its 2026 forecasts for underlying and headline inflation last month to 2.5% and 2.6%, respectively, from 1.7% and 1.8%.

Hang Seng
Japan's Service Sector Stagnates in May on Surging Costs
US Markets

Japan's Service Sector Stagnates in May on Surging Costs

Japan's service sector stagnated in May as supplier costs surged amid the ongoing conflict in the Middle East.The S&P Global Japan Services Business Activity Index fell to the neutral 50.0 mark from 51.0 in April, ending a 13-month streak of expansion. A reading of 50.0 indicates no change in business activity from the previous month."The ongoing war in the Middle East continued to exert pressure on the economy, most notably by driving a substantial increase in costs for businesses," Annabel Fiddes, S&P Global Market Intelligence's economics associate director, said. "Price indicators in May pointed to a record rise in selling prices for goods and services amid a near unprecedented increase in business costs, largely due to widespread supplier price hikes and supply chain disruption, but also higher labor costs."Average input prices rose to a 43-month high as the war in Iran triggered a spike in fuel, energy and raw material prices.In April, Japan's inflation slowed down, with the consumer price index decelerating to a 1.4% rise from the prior month's 1.8% growth, according to data from the Statistics Bureau.Some survey participants said activity levels rose because of higher sales and new business lines, while others said demand was weak and the growth of new orders slowed down, S&P Global said.Government data showed that firms' spending during the first quarter was flat. Capital spending dropped 2%, a far cry from the 6.5% growth in the previous quarter, reflecting cautiousness in spending amid the Middle East war, which brought disruption in the global supply chain.Meanwhile, employment grew at the slowest rate in nine months, S&P Global said. Government data showed that the number of employed people in April rose to 68.8 million from 68.2 million in March, while the unemployment rate eased month on month to 2.5% from 2.7%.Business sentiment stayed weaker than the post-pandemic trend despite slightly improving for the second straight month, as businesses are concerned over geopolitical uncertainty, rising costs and the ageing population, according to the ratings firm.Overall, the S&P Global Japan Composite PMI Output Index fell to 51.1 in May from 52.2 in April, pointing to only modest growth in broader private sector business activity.

Nikkei 225