The S&P 500 held near flat on Wednesday as climbing oil prices and rising odds of a Federal Reserve rate hike offset a heavy day of Big Tech earnings. Renewed U.S. strikes on Iran lifted oil prices, and Treasury yields held near multi-month highs as traders awaited a wave of Big Tech results.
The S&P 500 was slightly negative at 7,504. It held close to flat as traders weighed geopolitical risk against the tech-driven bull market.
Before the open, S&P 500 futures had slipped 0.3% and Nasdaq-100 futures 0.7%, while Dow futures dipped 24 points.
Oil surge revives Fed hike fears
U.S. Central Command carried out its 11th consecutive night of strikes against Iran, keeping Middle East tensions in focus. Brent crude rose 3.5% to $94.20 and U.S. West Texas Intermediate 3.8% to $87.56. Benchmark 10-year Treasury yields held near 4.65%, close to their May highs.
Higher energy costs fed straight into expectations for an interest-rate hike. The likelihood of a Fed rate hike this month reached as high as 33.7% before easing to 31.5%, up from 25.7% on Tuesday, based on fed-funds futures tracked by the CME FedWatch Tool. Keith Lerner, chief investment officer at Truist Advisory Services, said “Oil prices are leading interest rates up” and that the two factors complicate the Fed story.
Big Tech earnings in focus
Earnings offered a counterweight. Reports were due Wednesday from Alphabet, Tesla, ServiceNow, IBM and other technology and industrial names, with investors watching for signals on AI spending and cloud demand. Tesla was widely expected to report its first quarterly cash burn in over two years.
The major averages had snapped a three-session losing streak on Tuesday. Chipmakers drove that rebound, with the VanEck Semiconductor ETF climbing 4% as investors rotated back into AI-related shares.
World Bank chief economist Indermit Gill cautioned that escalating hostilities could knock global growth to as low as 1.3%, down from 2.9% last year.
Sources: CNBC, MarketWatch, Investing.com
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