U.S. stock markets opened lower on Wednesday evening, Beijing time. Rising oil prices put pressure on major indices. Investors continued to focus on another busy day for corporate earnings reports.
The Dow Jones Industrial Average fell 47.32 points, or 0.09%, to 52,177.32. The Nasdaq Composite dropped 152.58 points, or 0.59%, to 25,684.63. The S&P 500 index declined 19.42 points, or 0.26%, to 7,489.78.
Brent crude futures rose 4%, trading above $94 per barrel to reach their highest level in over a month, briefly touching $95. West Texas Intermediate crude futures gained 3%, surpassing $87 per barrel.
The rise in oil prices comes as the United States has conducted its 11th consecutive round of strikes against Iran. U.S. Secretary of State Marco Rubio stated that Iran is "not serious about negotiations."
He said: "If they are serious, we are serious. If they are not serious, then we will take the necessary measures to protect our interests and the interests of our allies."
Rubio also indicated that U.S. military forces will continue to "protect shipping" in the Strait of Hormuz.
Traders are closely monitoring oil prices, concerned they could keep consumer goods prices elevated—potentially prompting the Federal Reserve to raise interest rates.
As of Wednesday morning, traders in the federal funds futures market were pricing in a 27% probability of a Fed rate hike this month. According to the CME FedWatch Tool, traders also assigned a 70% probability of at least a 25-basis-point hike by September.
Corporate earnings returned to the spotlight on Wednesday, with reports expected from ServiceNow, International Business Machines, Tesla, Texas Instruments, and Alphabet. Investors will be watching for updates on AI spending, cloud demand, corporate technology budgets, and the outlook for the second half of the year.
As earnings season accelerates, investors remain focused on whether robust demand for AI infrastructure and software will continue to support the high valuations in the technology sector.
Julia Herman, a global market strategist at New York Life Investments, stated: "The second-quarter earnings season is heating up, but with most of the hyperscalers yet to report, the market is still waiting for a clear read on how AI investments are monetizing and how that translates into future capital expenditures."
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