OP Wire Market Update: Geopolitical Tensions and Key Fed Economic Data to Watch
US stock futures have dipped as traders focus on escalating violence in the Middle East. Iran has declared its airstrikes on Israel are over, but Israeli leaders have promised a strong response. The assault, which followed Israeli strikes on Hezbollah in Lebanon, contributed to a downturn in equities during the prior session.
On Tuesday, major US indices fell, with the Dow Jones Industrial Average down 174 points (0.4%), the S&P 500 losing 54 points (1.0%), and the Nasdaq Composite dropping 279 points (1.5%). Despite the overall weakness, energy and defense stocks like Northrop Grumman (NYSE
) and Lockheed Martin (NYSE
) outperformed, boosted by rising oil prices and increased defense demand.
Iran and Israel Conflict Escalates
Iran has stated that its missile strikes on Israel have concluded but warned of future attacks if provoked. Israeli Prime Minister Benjamin Netanyahu has vowed a significant response, potentially targeting Iranian oil facilities. The US has also warned of severe consequences for Iran’s actions, with Defense Secretary Lloyd Austin stating that the US is prepared to defend its interests in the Middle East.
The conflict, triggered by Israeli strikes on Hezbollah and the ongoing war in Gaza, has led to calls for a ceasefire, though fighting continues in Lebanon.
Oil Prices Surge Amid Middle East Unrest
Oil prices continued their rally on Wednesday, fueled by fears of supply disruptions in the Middle East. As of 03:43 ET, Brent crude jumped 2.6% to $75.50 per barrel, while US crude (WTI) surged 2.8% to $71.80 per barrel. Both benchmarks gained over 5% on Tuesday after Iran’s missile strikes on Israel.
OPEC+ is meeting later today, although no immediate changes to oil production levels are expected. Meanwhile, US crude inventories fell by 1.46 million barrels for the week ending September 27, less than the anticipated 2.1 million barrels, according to the American Petroleum Institute. Official government data is due later today.
Fed Economic Data to Watch This Week
In addition to geopolitical developments, investors are closely monitoring key economic data from the Federal Reserve that will provide insights into the health of the US economy:
Wednesday, October 2nd:
- ADP Employment Change: This private-sector jobs report is expected to show a gain of 153,000 jobs in September, down from the previous month’s 177,000, offering a preview ahead of the official nonfarm payrolls report.
- ISM Manufacturing PMI: This key measure of manufacturing activity is forecast to show continued contraction, with expectations of 47.8 for September. A reading below 50 indicates contraction in the sector.
- JOLTS Job Openings: The Job Openings and Labor Turnover Survey (JOLTS) is expected to reveal a slight decline in the number of job openings in August, reflecting a softening labor market.
Thursday, October 3rd:
- Initial Jobless Claims: Expected to show a slight rise, this weekly measure of unemployment filings will provide a snapshot of labor market health.
- Factory Orders: August’s factory orders are expected to increase by 0.4%, following a 2.1% drop in the previous month, offering insight into the strength of demand for manufactured goods.
Friday, October 4th:
- Nonfarm Payrolls Report: The most anticipated economic release of the week, the September jobs report is forecast to show an increase of 144,000 jobs, with the unemployment rate holding steady at 4.2%. This data will be closely watched as it could influence the Fed’s next interest rate decision.
Nike Shares Fall After Weak Earnings
Nike (NYSE
) shares tumbled in after-hours trading after the company reported a 10% decline in quarterly revenue and withdrew its full-year financial forecast. The athletic apparel giant saw sales dip to $11.59 billion for the quarter, missing expectations of $11.65 billion. Net income dropped 28% to $1.1 billion, driven by stiff competition and a leadership transition.
Nike’s decision to scrap its fiscal year 2025 guidance was linked to its upcoming leadership change, with CEO John Donahoe set to be replaced by Elliott Hill. The company expects an 8% to 10% decline in revenue for the current quarter.
Stay tuned to OP Wire for the latest market updates and insights, especially as new Fed data and geopolitical events unfold this week!
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