US stock markets opened slightly lower on Wednesday evening, Beijing time, after the Dow Jones Industrial Average recorded its best first-half performance in five years. Federal Reserve Chair Kevin Warsh is scheduled to speak, while markets continue to monitor developments in US-Iran relations. The ADP employment report for June showed an increase of 98,000 jobs, falling short of expectations.
The Dow Jones Industrial Average fell 88.02 points, or 0.17%, to 52,231.18. The S&P 500 index declined 20.52 points, or 0.27%, to 7,478.84. The Nasdaq Composite dropped 157.019 points, or 0.60%, to 26,056.701.
Stocks closed higher on Tuesday, capping a strong first half of 2026. Over the first six months of the year, the Dow gained 8.9%, marking its best first-half performance since 2021. The broader S&P 500 rose 9.6%, and the Nasdaq Composite advanced 12.8%. The small-cap Russell 2000 index surged nearly 22%, achieving its strongest first half since 1991.
A surge in chip and artificial intelligence-related stocks has been a primary driver of the market's gains, with Tuesday's advance partly attributed to strength in semiconductor shares. In fact, during the second quarter of 2026, a record-setting rally in chip stocks added a combined $2 trillion in market value to companies like Micron, Intel, and Advanced Micro Devices.
Looking ahead to the second half of the year, Paul Hickey, co-founder of Bespoke Investment Group, expressed continued optimism for the sector but cautioned that its momentum may have become excessive.
"We remain long-term bullish on the semiconductor sector, but I wouldn't be aggressively buying at these levels. This bull market is an AI-driven bull market, that's the theme. If this bull market is going to continue, it will be led by tech, and likely semiconductors, but they don't have to outperform all the time; you can't keep that pace forever," he stated during a media appearance on Tuesday afternoon. "So I think they are a little bit... extended in that regard. So I would probably suggest a little bit of a breather here."
On Wednesday, Federal Reserve Chair Kevin Warsh is set to speak at the European Central Bank's Central Banking Forum in Sintra, Portugal. Since taking office, Warsh has embarked on reshaping the US central bank by establishing new working groups to comprehensively review its current strategy and define modern monetary policy. Traders have also been anticipating that the central bank may be preparing to raise interest rates as part of its ongoing battle against inflation.
Markets continue to focus on the latest developments in US-Iran relations. Oil prices edged lower on Wednesday after Iran stated it would not meet with US representatives in Qatar, heightening market concerns about the peace process.
According to reports, Iranian officials indicated that Tehran and Washington still need to negotiate the terms of the provisional peace agreement signed last month before addressing more complex issues.
Jared Kushner, son-in-law of former US President Donald Trump, and US envoy Steve Witkoff arrived in Doha on Tuesday. However, a Qatari government spokesperson clarified that their meetings were with mediators, not directly with Iranian officials.
The United States and Iran reached a 14-point memorandum of understanding on June 17 to pause conflicts that had disrupted global oil shipments through the strategic Strait of Hormuz.
The Strait of Hormuz, located in the Persian Gulf between Oman and Iran, is one of the world's most critical energy transit chokepoints. This narrow waterway typically handles about 20% of global oil shipments.
Despite recent tensions, the oil market remains optimistic about the restoration of Middle Eastern supplies, according to ING strategists Warren Patterson and Ewa Manthey.
In a research note released Wednesday, they pointed out that tanker traffic through the strategic Strait of Hormuz still appears constrained. "It is undeniable that there has been a slight increase in inbound tanker traffic, suggesting growing confidence among shipowners to send vessels into the Persian Gulf," Patterson and Manthey noted. "If this trend accelerates, it would be a clear headwind—and could directly challenge our view that oil prices should rise from current levels," they added.
On the economic data front, the ADP report released Wednesday showed that private sector employment increased by a seasonally adjusted 98,000 in June. This was down from an unrevised 122,000 in May and slightly below the Dow Jones consensus estimate of 110,000.
Nearly half of June's job gains—48,000—came from the education and health services sector, which has been a consistent leader in employment growth. All but 2,000 of the new jobs were in the service-providing sector.
Other sectors recording gains included trade, transportation, and utilities (15,000); financial activities (14,000); and other services (8,000). Natural resources and mining shed 5,000 jobs, the only sector to contract. Leisure and hospitality added just 2,000 positions, continuing the sector's weak performance this year, which is seen as a gauge of underlying consumer demand.
"Pace of hiring has been solid, but ADP's data show the labor market is cooling," said Nela Richardson, chief economist at ADP. "We're seeing that job seekers are taking longer to find work, but there are also signs of tight labor supply in certain sectors. The overall effect is a slowdown in job growth."
Annual pay gains for job stayers held steady at 4.4%, while pay gains for job changers ticked up slightly to 6.6%.
Job growth was skewed toward smaller businesses. Firms with fewer than 50 employees added 53,000 jobs, while companies with 500 or more employees added 25,000. Medium-sized businesses added 29,000 positions.
The ADP report serves as a precursor to the more closely watched nonfarm payrolls data from the Bureau of Labor Statistics, due Thursday. In recent months, ADP's figures have generally trailed the official government reports, which have shown overall robust employment growth this year.
Consensus expectations are for the June nonfarm payrolls report to show an addition of 115,000 jobs, with the unemployment rate holding steady at 4.3%. Average hourly earnings are forecast to rise 0.3% month-over-month and 3.5% year-over-year.
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