The S&P 500 Index ($SPX) (SPY) closed down -0.74% on Wednesday, the Dow Jones Industrial Average ($DOWI) (DIA) closed down -1.21%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.29%. E-mini S&P June futures (ESM26) fell -0.78% and E-mini Nasdaq June futures (NQM26) fell -0.32%.
Stock indexes retreated on Wednesday, with the Nasdaq 100 falling from a new all-time high. The broader market came under pressure on Wednesday as the United States and Iran clashed overnight, sending WTI crude oil prices up more than +2% to a 1.5-week high and putting peace plans in doubt. Additionally, weakness in software, cybersecurity and private credit companies on Wednesday weighed on the broader market.
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The price of crude oil rose more than 2% on Wednesday after US forces intercepted Iranian ballistic missiles and drones aimed at neighboring Gulf states, raising tensions and reducing the chances of the Strait of Hormuz opening any time soon. The Tasnim news agency reported that Iranian Foreign Minister Abbas Araghchi said that “communications between Iran and the United States have not been cut off, but no tangible progress has been made in the negotiation process.”
On the plus side, AI infrastructure spending continues to support tech stocks. Marvell Technology rose more than +3% on Wednesday, adding to Tuesday’s 32% rise, to push chipmakers higher after Nvidia CEO Huang predicted the company would be next to hit a $1 trillion valuation, more than five times its current market capitalization.
Signs of strength in the US economy also support stocks after reports on Wednesday showed the May ADP employment change, the May ISM services index and April factory orders rose more than expected.
The May US ADP employment change rose by 122,000, slightly stronger than expectations of 120,000 and the largest increase in 16 months.
The US May ISM Services Index rose +0.9 to 54.5, stronger than expectations of 53.8. The May ISM Services Prices Paid subindex rose +0.6 to a 3.75-year high of 71.3, although below expectations of 72.3.
April US factory orders rose +4.8% MoM, stronger than expectations of +4.6% MoM and the largest increase in 11 months.
US MBA mortgage applications fell -2.5% in the week ending May 29, with the purchase mortgage subindex down -2.9% and the refinance mortgage subindex down -2.3%. The average 30-year fixed-rate mortgage fell -8 bps to 6.57% from 6.65% the previous week.
The Federal Reserve’s Beige Book was hawkish, indicating mild to moderate economic growth in most Federal Reserve districts through May 27, with little change in employment and most of the 12 Federal Reserve districts reporting higher inflation than in the previous report.
New York Federal Reserve President John Williams said: “Monetary policy is exactly in the right place. I don’t see any need to raise or lower interest rates at this time.”
Markets are pricing in a 3% chance of a +25bp rate hike at the next FOMC meeting on June 16-17.
The usually favorable first-quarter earnings season is coming to a close. As of Wednesday, 84% of the 485 S&P 500 companies that reported first-quarter earnings beat estimates. S&P 500 first-quarter earnings are expected to rise 12% year-over-year, according to Bloomberg Intelligence. Excluding the technology sector, first quarter earnings are expected to rise around +3%, the weakest level in two years.
Foreign stock markets closed mixed on Wednesday. The Euro Stoxx 50 closed with a drop of -0.89%. China’s Shanghai Composite closed up +0.22%. Japan’s Nikkei Stock Average hit a new all-time high and closed up +2.50%.
Interest rates
The September 10-year Treasury bond (ZNU6) closed down -8 ticks on Wednesday and the 10-year Treasury yield rose +4.6 bps to 4.489%. Treasury bond prices came under pressure on Wednesday amid escalating tensions between the United States and Iran, which lifted WTI crude oil by more than +2% to a 1.5-week high, boosting inflation expectations. Treasuries added to their losses on Wednesday after US economic reports showed the change in May ADP employment, the May ISM services index and April factory orders rose more than expected, hawkish factors for Federal Reserve policy. The Federal Reserve’s Beige Book also reported rising inflation pressures and was bearish on Treasuries.
European government bond yields rose on Wednesday. The 10-year German Bund yield rose to a 1.5-week high of 3.042% and ended +6.0 bps at 3.035%. The 10-year UK bond yield rose to a 1.5-week high of 4.939% and ended up +7.2 bps at 4.931%.
The Eurozone May S&P Composite PMI was revised up by +1.0 to 48.5 from the previously reported 47.5.
Eurozone April PPI rose +4.9% year-on-year, right in line with expectations and the fastest pace of increase in over three years.
The UK S&P Services PMI for May was revised up by +1.4 to 49.3 from the previously reported 47.9.
The swaps price in a 98% probability that the ECB will raise rates +25 bps at its next monetary policy meeting on June 11.
US Stock Engines
Software stocks sold off on Wednesday, putting pressure on the broader market. Datadog (DDOG), Atlassian Corp (TEAM), and ServiceNow (NOW) closed down more than -7%, and International Business Machines (IBM) closed down more than -6% to lead the losers in the Dow Jones Industrials. Additionally, Palantir Technologies (PLTR) closed down more than -6% and Oracle (ORCL) closed down more than -5%. Additionally, Salesforce (CRM) closed down more than -4% and Autodesk (ADSK) and Intuit (INTU) closed down more than -3%. Finally, Microsoft (MSFT) and Adobe Systems (ADBE) closed down more than -2%, and Workday (WDAY) closed down more than -1%.
Cybersecurity stocks retreated on Wednesday, led by a -7% drop in Okta (OKTA) and a -6% drop in Zscaler (ZS). Additionally, Palo Alto Networks (PANW) closed down more than -5% despite reporting better-than-expected third-quarter earnings as it failed to meet buyers’ lofty expectations. Additionally, Cloudflare (NET) and CrowdStrike Holdings (CRWD) closed down more than -2%, and Fortinet (FTNT) closed down more than -1%.
Private credit stocks faltered Wednesday as 17% redemption requests for Cliffwater’s private credit fund weighed on alternative asset stocks. Carlyle Group (CG) closed down more than -4%, and Ares Management (ARES), KKR & Co (KKR), Blackstone (BX), and Blue Owl Capital (OWL) closed down more than -3%. Additionally, Apollo Global Management (APO) and BlackRock (BLK) closed with losses of more than -2%.
Shares of chip makers and artificial intelligence infrastructure rose on Wednesday, providing support to the broader market. Sandisk (SNDK) closed up more than +6% to lead gains on the Nasdaq 100, and Western Digital (WDC) closed up more than +5%. Additionally, Intel (INTC), Advanced Micro Devices (AMD), and ON Semiconductor (ON) closed with gains of more than +4%, and Analog Devices (ADI), KLA Corp (KLAC), and Qualcomm (QCOM) closed with gains of more than +3%. Additionally, Applied Materials (AMAT), ARM Holdings Plc (ARM), and Lam Research (LRCX) closed with gains of more than +2%.
Global Payments (GPN) closed down more than -8% after Susquehanna cut its price target on the stock to $111 from $119, noting that exposure to Middle East travel will remain a “burden.”
Ulta Beauty (ULTA) closed down more than -4% after analysts noted that the company’s annual guidance implies that the outlook for the second half of the year is weaker than expected.
Gitlab (GTLB) closed down more than -2% after announcing it will cut about 14% of its workforce and exit 22 countries as part of a restructuring.
Medtronic Plc (MDT) closed up more than +6% after reporting fourth-quarter revenue of $9.81 billion, above the consensus of $9.64 billion.
GameStop (GME) closed with a gain of more than +6% after reporting that first-quarter net sales increased +14% year-over-year to $835.3 million and said its board of directors approved a $2 billion share buyback authorization.
Meta Platforms (META) closed with a gain of more than +4% after announcing that it is selling access to an artificial intelligence agent called Meta Business Agent, which will chat with a company’s customers via WhatsApp, Messenger and Instagram.
Marvel Technology (MRVL) closed up more than +3% today, adding to Tuesday’s +32% gain, after Nvidia CEO Huang predicted the company will be next to reach a $1 trillion valuation, more than five times its current market cap.
Sherwin-Williams (SHW) closed up more than +1% after the company and Nippon Paint abandoned their efforts to jointly acquire Akzo Nobel.
Earnings Reports (4/6/2026)
Brown-Forman Corp (BF/B), Ciena Corp (CIEN), Cooper Cos Inc/The (COO), Docusign Inc (DOCU), Guidewire Software Inc (GWRE), Lululemon Athletica Inc (LULU), Rubrik Inc (RBRK), Samsara Inc (IOT), Toro Co/The (TTC).
On the date of publication, Rich Asplund had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
