The US stock market exhibited a mixed performance during Wednesday's midday session, with the Dow Jones Industrial Average climbing 300 points. Federal Reserve Chair Kevin Warsh did not provide any hints regarding the July interest rate decision but stated that inflation remains "too high." Market participants continued to monitor developments in US-Iran relations. The US ADP employment report for June showed an increase of 98,000 jobs, falling short of expectations.
The Dow Jones rose by 300.19 points, or 0.57%, to 52,619.39. The Nasdaq Composite declined by 64.05 points, or 0.24%, to 26,149.67. The S&P 500 index gained 16.36 points, or 0.22%, reaching 7,515.72.
Stocks closed higher on Tuesday, marking a strong finish for the first half of 2026. In the first six months of the year, the Dow Jones advanced 8.9%, achieving its best first-half performance since 2021. The broader S&P 500 index rose 9.6%, while the Nasdaq Composite increased by 12.8%. The small-cap Russell 2000 index surged nearly 22%, recording its strongest first half since 1991.
The surge in chip and artificial intelligence-related stocks has been a key driver of the market rally. Part of Tuesday's gains were attributed to advances in semiconductor shares. In fact, during the second quarter of 2026, a record-breaking rally in chip stocks added a combined $2 trillion in market value to companies like Micron, Intel, and Advanced Micro Devices.
As the market moves into 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.
"Long-term, we are still 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 probably 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 in that regard, they've gotten a little... stretched. So I would probably recommend a little bit of a breather here."
Federal Reserve Chair Kevin Warsh spoke at the European Central Bank's Central Banking Forum in Sintra, Portugal, on Wednesday. Warsh did not signal the likely path for the July rate decision but reiterated that inflation is "too high."
He refrained from giving any indications about potential policy actions later this month but noted that price levels remain elevated.
"We are all in the price stability business. It may not be our only job, but if there was one common feeling I had over the last few days, it was an openness to AI-related questions, an openness to productivity, but we all look around and see that prices are too high," Warsh said during a panel discussion in Sintra.
Also participating in the panel were European Central Bank President Christine Lagarde, Bank of England Governor Andrew Bailey, and Bank of Canada Governor Tiff Macklem.
Aside from the post-meeting press conference two weeks prior, this was Warsh's first public speech since his confirmation in May. The Federal Reserve has held interest rates steady this year as policymakers weigh persistent inflation and other economic factors.
Markets continued 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 concerns about the peace process.
According to media reports, Iranian officials indicated that Tehran and Washington still need to consult on the terms of a provisional peace agreement signed last month before addressing more complex issues.
Jared Kushner, the 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 they were meeting with mediators, not directly with Iranian officials.
The US and Iran reached a 14-point memorandum of understanding on June 17 to suspend hostilities 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 clashes between the US and Iran, 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. "Admittedly, 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 lower than May's 122,000 (unrevised) 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 service-providing industries.
Other sectors showing gains included trade, transportation, and utilities (15,000); financial activities (14,000); and other services (8,000). Natural resources and mining lost 5,000 jobs, the only sector to contract. Leisure and hospitality added a mere 2,000 positions, continuing the sector's weak performance this year, which is seen as a gauge of underlying consumer demand.
"The pace of hiring reflects a supply and demand dynamic worth watching. We know it's taking job seekers longer to find work, but there are also signs of labor supply tightness in certain sectors. For now, the net effect is slower job growth," said Nela Richardson, chief economist at ADP.
Annual pay gains for job stayers held steady at 4.4%, while pay growth 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. Midsize businesses contributed 29,000 new jobs.
The ADP report serves as a precursor to the more closely watched nonfarm payrolls data from the Bureau of Labor Statistics, due on Thursday. In recent months, ADP's figures have generally been lower than the official government report, which has shown overall robust employment growth this year.
Market consensus expects the June nonfarm payrolls to increase by 115,000, 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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