Pre-Market Update: Jobs Data, Fed Speech and Iran Tensions Drive Market Moves Wednesday

TLDR

• Dow, S&P 500, and Nasdaq futures all fell Wednesday morning to start Q3
• Fed Chair Kevin Warsh is speaking at the ECB forum in Portugal; markets are watching for rate clues
• Bets on Fed rate hikes are growing, with the 10-year Treasury yield at 4.471%
• Iran peace talks faltered as Iranian delegates refused to meet Trump’s team in Qatar
• Oil dropped about 1% as hopes for a deal faded and Hormuz closure threats resurfaced

U.S. stock futures pulled back on Wednesday, July 1, to kick off the third quarter on a cautious note. Investors were focused on Federal Reserve Chairman Kevin Warsh’s appearance at a European Central Bank forum in Portugal.

Dow Jones Industrial Average futures fell around 0.2% to 0.3%. S&P 500 futures dropped about 0.2%, and Nasdaq 100 futures slid as much as 0.5%.

The pullback comes after a strong second quarter. The S&P 500 rose 15% in Q2, while the Nasdaq jumped 21%. Both had their best quarters since 2020. The Dow gained 13%, its best quarter since 2022.

Markets Eye Kevin Warsh for Rate Signals

Warsh was scheduled to speak at the ECB’s annual policy forum in Sintra, Portugal at 9 a.m. Eastern on Wednesday. Investors were watching closely for any signals about the direction of interest rates.

Wall Street was not expecting Warsh to offer formal forward guidance. But any comments on inflation or the economy could move markets, especially as rate hike bets grow.

ING analyst Chris Turner wrote that consumer confidence has surprised to the upside and U.S. equities remain near the top of recent ranges. He added it would be hard to see Warsh soften his hawkish tone given that backdrop.

The 10-year Treasury yield stood at 4.471%, broadly flat from the previous day. The yen hit a fresh 40-year low against the dollar, partly driven by growing expectations the Fed will raise rates.

ADP reported that the U.S. added 98,000 private sector jobs in June. That data, along with Challenger job cuts, was helping set the stage for the official June jobs report due Thursday.

The jobs report is being released a day early due to the Fourth of July holiday. Investors were also watching manufacturing data for more clues on the health of the U.S. economy.

Iran Talks Stall, Oil Drops

Peace talks in Qatar hit a wall on Wednesday. Iran said its delegates would not meet with President Trump’s team, pulling back hopes for a lasting deal.

Oil prices reversed earlier gains and fell about 1%. Brent crude futures dropped toward $72 a barrel, while WTI crude slipped below $69.

Oil had been trading near $70 a barrel, close to levels seen before the Iran conflict began. Iran’s Islamic Revolutionary Guard Corps had previously warned it would close the Strait of Hormuz again without guarantees over control of the waterway.

Trump has told aides he is comfortable letting negotiations run past the August 18 deadline for a nuclear deal, according to the Wall Street Journal.

Micron and Sandisk were among the tech stocks leading premarket declines. Gold slipped back below $4,000 an ounce on rate hike fears.

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