TLDR
- US stock futures fell Wednesday after a record-setting day for the Dow and strong Nasdaq gains
- The S&P 500 and Nasdaq rose 15% and 21% in Q2 — the best quarter for both since 2020
- Fed Chair Kevin Warsh is speaking at a European Central Bank forum, with markets watching for rate clues
- The June jobs report drops Thursday and could shape Fed rate hike expectations
- Oil is near pre-conflict levels but Iran’s threats over the Strait of Hormuz remain a watchpoint
US stock futures pulled back on Wednesday as investors paused after a strong finish to the second quarter. Futures on the Dow, S&P 500, and Nasdaq all fell between 0.2% and 0.7% in early trading.
Tuesday saw the Dow Jones Industrial Average close at a new record. The S&P 500 posted its best quarter since 2020, rising 15% in Q2. The Nasdaq Composite gained 21% in the same period, also its best quarter since 2020. The Dow rose 13% in Q2, its best quarter since 2022.
Fed Chair Warsh in the Spotlight
Federal Reserve Chairman Kevin Warsh was set to speak at the European Central Bank’s annual forum in Sintra, Portugal, on Wednesday morning. Markets are watching closely for any signals on whether the Fed plans to raise interest rates later this year.
Analysts say there is little reason to expect Warsh to shift his hawkish tone. ING analyst Chris Turner noted that consumer confidence has surprised on the upside, and US equities are still delivering near double-digit year-to-date returns.
The 10-year Treasury yield stood at 4.471%. The Japanese yen fell to a 40-year low against the dollar, driven partly by expectations of further Fed tightening.
The June jobs report is due Thursday. The data will give markets a clearer picture of the labor market and help investors assess the likelihood of a rate hike later this year.
Iran Tensions and Oil Prices
Oil prices held near $70 a barrel, close to pre-conflict levels. The US and Iran are continuing diplomatic talks, though tensions remain.
President Trump has considered returning to military action but decided to continue negotiations, according to The Wall Street Journal. Trump has told aides he is comfortable if talks extend past the August 18 deadline for a nuclear deal.
Iran’s Islamic Revolutionary Guard Corps has warned it could close the Strait of Hormuz again if it does not receive guarantees over sole control of the waterway. That threat is keeping oil traders cautious.
Gold slipped below $4,000 an ounce on Wednesday as rate-hike fears weighed on the non-yielding metal. The dollar rose as traders increased bets on Fed tightening.
AI and chip stocks drove much of the tech sector’s gains in the first half of the year. Analysts say only tech looks positioned to continue leading the market into the second half.
Investors are now watching Thursday’s jobs report as the next major data point. A strong number could add pressure for the Fed to raise rates, while a weaker reading might ease those concerns.
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