U.S. stock index futures were broadly unchanged on Wednesday, pointing to a relatively flat open following declines across the major averages in recent sessions.
Crude oil prices and Treasury yields pulled back from recent highs, while investors continued to assess developments in the Middle East and awaited Friday’s U.S. employment report.
Iran launched missile and drone attacks toward U.S.-linked sites in Bahrain, Jordan and Kuwait earlier Wednesday after the U.S. carried out strikes against Iranian military targets on Tuesday.
The Iranian attacks followed a warning from U.S. President Donald Trump that retaliation would result in Iran being “hit much harder” and that the U.S. was still holding back “the biggest attack of them all.”
Oil Prices and Treasury Yields Pull Back
Despite the latest exchange of attacks, U.S. crude oil futures fell 0.8% after rising more than 8% over the previous two sessions.
Treasury yields also declined, with the yield on the benchmark 10-year note retreating from its highest closing level in almost three years.
The pullbacks followed a period of rising energy prices and bond yields that had increased market attention on inflation and the outlook for U.S. interest rates.
Investors were also awaiting Friday’s monthly employment report from the Labor Department, which is expected to provide additional information on labour-market conditions.
ADP Private Payroll Growth Comes in Below Forecasts
Ahead of the government employment report, ADP reported that U.S. private-sector employment increased by 38,000 jobs in August.
That followed an upwardly revised increase of 46,000 jobs in July. The previous month’s figure had initially been reported as a gain of 44,000.
Economists had expected private-sector employment to increase by 48,000 jobs in August.
The ADP figures provide one measure of labour-market conditions but do not necessarily predict the outcome of the Labor Department’s employment report.
Nasdaq Falls 1% in Previous Session
U.S. equities recorded broader declines on Tuesday following moderate losses over the two preceding sessions.
The Nasdaq Composite dropped 271.11 points, or 1%, to finish at 26,099.77. The Dow Jones Industrial Average declined 419.02 points, or 0.8%, to 52,766.88, while the S&P 500 fell 54.67 points, or 0.7%, to 7,631.47.
The indices finished above their session lows but remained firmly negative.
The declines occurred after U.S. Central Command announced a new series of strikes against Islamic Revolutionary Guard Corps targets in Iran.
Centcom said the strikes followed recent attempted attacks by the IRGC against commercial shipping in the Strait of Hormuz and U.S. service members deployed in the region.
Trump Warns of Further Action Against Iran
Following the U.S. strikes, Trump warned Iran against retaliation in a post on Truth Social.
Trump said Iran would be “hit again at a much harder and higher level” if it retaliated.
“But it will not be the biggest attack of them all, that is waiting in the wings and, when it is over, there will be very little left of the Islamic Republic of Iran!” Trump said.
U.S. crude oil futures rose by more than 5% during Tuesday’s session following the latest developments.
Higher oil prices increased market attention on potential inflationary effects and their implications for monetary policy, although the eventual impact will depend on the duration and extent of changes in energy prices.
U.S. Manufacturing Growth Slows in August
U.S. stocks recovered some of their earlier losses on Tuesday after the Institute for Supply Management reported slower growth in manufacturing activity.
The ISM manufacturing purchasing managers’ index declined to 54.6 in August from 55.6 in July. Economists had expected a reading of 55.2.
A reading above 50 indicates expansion in manufacturing activity.
The softer-than-expected figure provided additional information on economic conditions ahead of Friday’s employment report and the Federal Reserve’s policy meeting later this month.
The data do not establish the outcome of the Fed’s next interest-rate decision, which will depend on policymakers’ assessment of inflation, employment and other economic indicators.
Gold, Networking and Transportation Stocks Decline
Several sectors recorded larger declines during Tuesday’s session.
Gold-related shares moved lower alongside the precious metal, with the NYSE Arca Gold Bugs Index falling 4.2%.
The NYSE Arca Networking Index declined 2.6%, while the Dow Jones Transportation Average fell 2.5%.
Software, housing and semiconductor stocks also traded lower, while oil producers and pharmaceutical shares moved against the broader market decline.
Investors on Wednesday remained focused on Middle East developments, energy prices, Treasury yields and upcoming U.S. labour-market data as they assessed the outlook for financial markets and monetary policy.