US stocks struggle for direction as rising Middle East tensions weigh
Investing.com — U.S. stocks slipped slightly Wednesday after stronger-than-expected employment data helped dilute the negative sentiment generated by the escalated tensions in the Middle East as well as disappointing news from sportswear giant Nike .
By 09:35 ET (13:35 GMT), the Dow Jones Industrial Average contract was down 30 points, or 0.1%, the S&P 500 index traded 20 points, or 0.4%, lower and the NASDAQ Composite dropped 55 points, or 0.3%.
ADP employment rises more than expected
The ADP National Employment Report, released earlier Wednesday, indicated that U.S. private payrolls increased more than expected in September, offering up more evidence that the country’s labor market remains in a reasonably healthy state.
Private payrolls increased by 143,000 jobs last month after rising by an upwardly revised 103,000 in August.
This was above the increase of 120,000 positions forecast for last month after a previously reported gain of 99,000 in August.
The ADP report was published ahead of Friday’s closely watched employment report for September from the Labor Department’s Bureau of Labor Statistics, which is likely to guide market sentiment ahead of the next Federal Reserve meeting later this month.
Middle East hits risk sentiment
The main indices were negative territory, however, after Iran launched a barrage of missiles at Israel late Tuesday as retaliation to Israeli strikes on Lebanon-based Hezbollah.
Israeli Prime Minister Benjamin Netanyahu promised a retaliation to Tehran’s airstrikes, saying in a statement that Iran “made a big mistake” and “will pay for it.”
The US has also said there will be “severe consequences” for Tehran’s actions, with Defense Secretary Lloyd Austin adding that Washington is “well-postured” to defend its interests in the Middle East.
Although the situation has the potential to deteriorate further, UBS expects it will “stop short of an all-out war between Israel and Iran, including their respective allies.”
Nike slumps after withdrawing forecast
Nike (NYSE:NKE) stock fell over 7% after the US athletic apparel maker withdrew its full-year financial forecast and posted a 10% slump in quarterly revenue.
The results come as Nike undergoes an executive-level shake-up that will see boss John Donahoe replaced by company veteran Elliott Hill. Donahoe had overseen a period of weak performance fueled by stiff competition in the $150 billion a year global sneakers market.
Humana (NYSE:HUM) stock fell 23% after data showed that the proportion of the health insurer’s membership enrolled in four-star Medicare plans and above for next year fell sharply.
Tesla (NASDAQ:TSLA) stock fell over 3% after the EV manufacturer reported third-quarter vehicle deliveries below estimates as incentives and low-cost financing failed to lift demand for its aging models in a highly competitive market.
Crude soars on Middle East turmoil
Oil prices soared Wednesday as the escalating tensions in the Middle East raised concerns about a potential hit to output from that oil-rich region.
By 09:35 ET, the Brent contract climbed 3.1% to $75.84 per barrel, while U.S. crude futures (WTI) traded 3.4% higher at $72.22 per barrel. Both crude benchmarks surged more than 5% on Tuesday after Iran’s attack on Israel.
Elsewhere, US crude inventories fell by about 1.46 million barrels for the week ended Sept. 27, compared with expectations of a decline of about 2.1M barrels, according to data from the American Petroleum Institute.
The official government inventory report is set to be released later in the session.
