U.S. stock futures slipped Wednesday as renewed fighting in the Middle East put the S&P 500's nine-session winning streak at risk.
Dow Jones Industrial Average futures slipped 0.16%, while S&P 500 futures were off 0.07% and Nasdaq $NDAQ-100 futures retreated 0.1%. The overnight escalation involved Iranian missile launches targeting Kuwait and Bahrain, following U.S. Central Command's announcement that American forces had conducted strikes on Qeshm Island after thwarting Iranian attacks throughout the region. Brent crude oil climbed to just under $98 a barrel, a sharp move higher from the roughly $91 level where it had been trading the previous week.
Tuesday's session ended with the S&P 500 breaching the 7,600 mark for the first time, a 0.13% advance, as the Dow tacked on 228.91 points, or 0.45%, and the Nasdaq posted a marginal gain of 0.03%. Another gain Wednesday would give the S&P 500 its longest winning streak since 1995, according to The Wall Street Journal.
President Donald Trump claimed in a New York Post podcast interview published Wednesday that Iran had committed to forgoing nuclear weapons, though he cautioned that the agreement was not necessarily permanent, saying "they can change their mind." He also said he would likely meet Iran's new leader at some point, a comment that moved oil futures lower briefly before markets stabilized.
Wednesday's economic calendar includes the ADP private payrolls report for May and the Institute for Supply Management services index. The payroll data could also influence interest rate hike bets, with CME $CME Group figures cited by The Journal showing traders pricing in better than a 75% probability of a Fed rate increase before year's end.
The tech sector has been a central driver of the recent rally. A note from BTIG technical strategist Jonathan Krinsky, reported by MarketWatch, pointed out that a 44.6% advance over the past 10 weeks would, if it held through Friday's close, be without precedent in the S&P 500 Information Technology Sector Index's history going back to 1990. At Tuesday's close, the index registered an RSI reading of 82, a level that signals overbought conditions at anything above 70, and had stretched to a position 28% beyond its 200-day moving average — a combination that Krinsky said has appeared only about 10 times since 1990 and has typically given way to periods of consolidation or steeper losses in the weeks that followed.
Meghan Shue, head of investment strategy at Wilmington Trust, said on CNBC that markets may be due for a pause as summer begins. "The momentum has been incredibly strong," she said. "Now we are left with kind of the summer lull. Trading activity might slow a little bit, and we still have a lot of geopolitical risk on the horizon." Shue stopped short of predicting a steep decline, though she suggested the conditions were in place for the market to take a breather, giving back some gains and seeing bumpier trading through the warmer months.
Broadcom $AVGO earnings after the closing bell Wednesday will be among the most closely watched corporate events of the day.