U.S. stock futures traded mixed in the overnight session on Wednesday, with the S&P 500 futures declining 0.32% and Nasdaq 100 futures down 0.46% as of 9.20 p.m ET, while Dow futures rose 0.03%. The U.S. and Iran traded fire overnight in one of the most significant escalations since the ceasefire took effect in April, with Kuwait's main airport damaged by Iranian drones, killing one and wounding dozens. The Federal Reserve's latest Beige Book shows the U.S. economy expanded marginally through May, though inflationary pressures continue to weigh on consumers and corporate profit margins, with the Personal Consumption Expenditures Index rising 3.8% in April, the highest since 2023.
Among ETFs tracking benchmark indexes, the SPDR S&P 500 ETF (SPY) and the Invesco QQQ Trust (QQQ) traded in the red at the time of writing, with retail sentiment in the 'bullish' territory for SPY and in the 'bearish' territory for QQQ. The SPDR Dow Jones Industrial Average ETF Trust (DIA) was trading flat amid 'bearish' sentiment. Meanwhile, the iShares 20+ Year Treasury Bond ETF (TLT) was up 0.15% amid 'bearish' sentiment at the time of writing.
U.S. Benchmark Indexes Close Lower Wednesday
On Wednesday, all three U.S. benchmark indexes fell at the close. The Dow Jones Industrial Average lost more than 600 points to close 1.21% lower at 50,687.07. The S&P 500 Index closed down 0.74% at 7,553.68, snapping a winning streak that was on track for the longest in more than two decades. The Nasdaq Composite was down 0.89% at close, finishing at 26,853.98.
U.S. and Iran Exchange Fire Amid Ceasefire Escalation
The U.S. and Iran traded fire overnight in one of the most significant escalations since the ceasefire took effect in April. Tensions between Washington and Tehran have increased over the week after Israel's military strikes in Lebanon stoked regional tensions. Kuwait and Bahrain have been caught in-between, with Kuwait facing a barrage of ballistic missiles on Wednesday. Kuwait has reported that Iranian drones damaged its main airport, killing one and wounding dozens.
U.S. President Donald Trump has reportedly said he would consider ending the ceasefire with Iran if any American troops are killed in the renewed tensions, according to a report from the Wall Street Journal. U.S. Secretary of State Marco Rubio called the attacks defensive on Washington's end, stating the escalations were not a full-scale war. "They are happening in response to an Iranian action," Rubio told reporters in a House hearing Wednesday. "If they don't shoot at those ships, we don't shoot, but we have to respond."
Chris Beauchamp, chief market analyst at IG, reportedly told Bloomberg, "We are no longer watching a delicate ceasefire, instead what is occurring is more akin to a low-intensity conflict. This simply leaves the vital issue of oil supplies unresolved, and the clock continues to tick down towards doomsday for oil inventories and the global economy."
Economist Robin Brooks, a Senior Fellow at The Brookings Institution and a former chief FX strategist at Goldman Sachs, said that markets see a permanent breakdown in negotiations as a low-probability outcome. "You're surprised the market isn't pricing in a tail risk? No deal EVER is the very extreme end on the probability distribution for how this thing turns out. No war lasts for ever, at least as far as I'm aware," he said in a post on X.
Federal Reserve Beige Book Shows Marginal Economic Expansion Through May
The Federal Reserve's latest Beige Book shows that even though the U.S. economy expanded marginally through May, inflationary pressures continue to weigh on consumers and corporate profit margins. The Personal Consumption Expenditures Index (PCE) rose 3.8% in April, the highest since 2023, according to data from the Bureau of Economic Analysis.
Broadcom Declines After Hours on Q3 Revenue Outlook
Broadcom Inc. (AVGO) declined more than 12% in the extended trading hours of Wednesday after its third-quarter (Q3) revenue outlook, which came in below the higher end of consensus estimates, failed to impress investors.
Strategy (MSTR) shares closed down 7% and continued to decline in the overnight session, extending to three days in the red after the Michael Saylor-backed company announced its first Bitcoin (BTC) sale in about four years.
Keel Infrastructure Corp. (KEEL) has jumped onto the retail radar this week amid significant speculation about a data center lease announcement with a major hyperscaler.
CrowdStrike Holdings Inc. (CRWD) reported its first-quarter (Q1) fiscal 2027 results on Wednesday, beating Wall Street expectations on both earnings and revenue.
Oil Futures Edge Lower on Israel-Lebanon Ceasefire Agreement
Oil futures edged lower in the overnight session, heading into Thursday as a new ceasefire agreement between Israel and Lebanon boosted sentiment. Brent crude futures expiring in August were down nearly 1%, trading at around $96.84 a barrel at the time of writing, while WTI crude futures expiring in July were about 0.79% lower, trading around $95.26 a barrel.
Yields on the 10-year Treasury were at 4.481%, while gold prices climbed to around $4,467.01 per ounce.
Asian markets edged lower on Thursday, with the KOSPI, Nikkei 225 and the SSE Composite index all declining at the open. Australian stocks were also trading lower at the time of writing.
FAQ
What caused U.S. stock futures to decline on Wednesday overnight?
U.S. stock futures declined as the U.S. and Iran traded fire overnight in one of the most significant escalations since the ceasefire took effect in April, with Kuwait's main airport damaged by Iranian drones, killing one and wounding dozens.
What did the Federal Reserve's Beige Book reveal about the U.S. economy through May?
The Federal Reserve's latest Beige Book shows the U.S. economy expanded marginally through May, though inflationary pressures continue to weigh on consumers and corporate profit margins, with the Personal Consumption Expenditures Index rising 3.8% in April, the highest since 2023.
