Oil pulls back, Broadcom disappoints - what’s moving markets

Investing.com - U.S. stock futures were little changed on Wednesday evening as investors weighed renewed tensions between the U.S. and Iran, rising interest-rate concerns and a fresh batch of corporate news. Oil prices eased after a three-day rally, while investors looked ahead to Friday’s key U.S. labor market report for clues on the Federal Reserve’s next move.

1. U.S. futures hold steady as investors await jobs data

U.S. stock index futures were broadly flat on Wednesday evening, following a positive session on Wall Street as markets continued to recover from a sluggish start to September.

By 03:50 ET, S&P 500 Futures were steady at 7,671.1 points, while Nasdaq 100 Futures and Dow Jones Futures were also little changed at 29,211.25 and 53,195 points, respectively.

Gains on Wall Street remained limited, however, with investors reluctant to make big bets ahead of Friday’s closely watched U.S. labor market data.

A stronger-than-expected jobs report could reinforce expectations for higher interest rates, potentially putting pressure on growth stocks and other rate-sensitive parts of the market. A weaker report could have the opposite effect by strengthening the case for easier monetary policy.

2. Oil pulls back as Trump says Iran attacks won’t last long

Oil prices edged lower in Asian trading on Thursday after climbing for three straight sessions, as investors assessed the latest developments in the U.S.-Iran conflict.

Brent crude futures fell 0.4% to $95.25 a barrel, while WTI crude futures slipped 0.2% to $90.80. Both contracts had gained nearly 1% on Wednesday, reaching their highest levels in about five weeks.

The pullback came after President Donald Trump said renewed attacks on Iran would not last long, while U.S. officials pointed to a recovery in energy flows through the Strait of Hormuz.

Oil remains one of the biggest links between the Iran conflict and financial markets. If supplies through Hormuz recover, some of the recent inflation pressure could ease. But another disruption could push crude higher and make it harder for central banks to cut interest rates.

3. Iran launches strikes at U.S. bases in Kuwait

Tensions in the Middle East remained elevated after Iran launched missile and drone strikes at U.S. bases in Kuwait, state-run Press TV reported late Wednesday.

The Kuwaiti Armed Forces said its air defense systems were intercepting "hostile targets," without identifying their source.

The latest attacks mark a renewed escalation between Washington and Tehran after a period of relative calm. The conflict has also kept the Strait of Hormuz - a crucial route for global energy shipments - firmly in focus.

The renewed fighting follows U.S. strikes on targets in Iran near the strait and subsequent Iranian drone and missile attacks on U.S. infrastructure across the Gulf.

Investors are watching whether the conflict spreads across the Gulf or threatens energy shipments. A sustained disruption to Hormuz could send oil prices sharply higher, adding to inflation and potentially complicating the Federal Reserve’s interest-rate decisions.

4. Fed officials offer clues on the rate outlook

New York Fed President John Williams said rising long-term bond yields reflect the strength of the U.S. economy rather than concerns about inflation.

Williams told CNBC that higher borrowing costs were being driven by a strong economic outlook, supported in part by heavy investment in artificial intelligence, data centers and technology.

Fed Governor Christopher Waller is also due to speak later on Thursday, giving investors another opportunity to gauge the central bank’s thinking ahead of its next policy decision.

Higher bond yields can compete with stocks for investors’ money and increase borrowing costs for companies and consumers. If yields stay elevated because the economy is strong, investors may also have to adjust expectations for how quickly the Fed can lower rates.

5. Broadcom disappoints with revenue outlook despite strong AI demand

Broadcom could came under pressure after the chipmaker’s fiscal fourth-quarter revenue guidance fell short of Wall Street expectations, overshadowing continued strength in its artificial intelligence business.

Broadcom forecast fourth-quarter revenue of about $34.8 billion, below analysts’ average estimate of roughly $35.05 billion. The company projected AI chip sales of $21.7 billion, slightly above expectations of $21.33 billion.

The results themselves were broadly in line with Wall Street forecasts, but the weaker-than-expected overall revenue outlook appeared to be the main focus for investors.

Broadcom is one of the key beneficiaries of the AI infrastructure boom, so its guidance offers investors another read on whether spending on AI chips and data centers remains strong enough to support elevated technology valuations.

The fact that AI chip sales beat expectations but total revenue guidance disappointed could also highlight how closely investors are scrutinizing AI-related growth.

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