In the latest developments of the US equity markets, a mixed performance was observed amidst turbulent trading conditions. The fluctuations were likely attributed to the recent pullback in crude oil prices and the rise in government bond yields, implying a potential easing of fears regarding an imminent large-scale conflict between Israel and Iran. During Wednesday afternoon trading, the Nasdaq Composite saw a slight increase of 0.2%, reaching a level of 17,950.5.
In contrast, the S&P 500 experienced a marginal decline of less than 0.1%, settling at 5,707.2, while the Dow Jones Industrial Average managed to add less than 0.1%, closing at 42,185.9. These indexes oscillated between gains and losses during the earlier sessions of the day. Notably, technology and energy sectors emerged as the only gainers in intraday trading, while sectors such as consumer staples and discretionary items faced the most declines. Tensions escalated on Wednesday as Israeli forces clashed with Iran-supported Hezbollah fighters in southern Lebanon, following Iran's unprecedented attack on Israeli targets the previous day.
Reports indicated that the attack failed to inflict any damage on Israel’s key civilian and defense infrastructures. Israeli Prime Minister Benjamin Netanyahu remarked that Iran had committed a significant error and warned that it would face repercussions, although he provided scant details regarding any forthcoming retaliatory measures. According to Helima Croft, an analyst at RBC Capital Markets, the missile strikes, which encompassed approximately 180 projectiles, were executed just hours after Israel initiated ground operations in Lebanon.
Croft highlighted that Iranian diplomats had indicated during the UN General Assembly week that such military actions would cross a 'redline'. Furthermore, she noted that Iran had issued advance notifications of its military intent, enabling US forces to prepare for Israel's defense, similar to events in April. On the commodities front, West Texas Intermediate crude oil prices increased by 0.7% to $70.31 per barrel, having initially surged over 3% earlier in the day, thereby retracting some of the Middle Eastern risk premium.
Excluding the volumes held in the Strategic Petroleum Reserve, US commercial crude oil inventories rose by 3.9 million barrels in the week concluding September 27, following a reduction of 4.5 million barrels in the preceding week, contrary to the anticipated decline of 1.4 million barrels based on a Bloomberg survey. The CBOE Volatility Index, known as the fear gauge among investors, also exhibited a decline of 0.6%, settling at 19.13 after an earlier uptick in the session. Meanwhile, most US Treasury yields noted an increase during intraday trading, with the 10-year Treasury yield up by 4.4 basis points, reaching 3.79%. In the realm of precious metals, gold prices fell by 0.8% to $2,669.01 per ounce as demand for safer assets waned. On the economic front, ADP reported an increase of 143,000 in private payrolls for September, surpassing Bloomberg’s expectations of a 125,000 gain.
The rise in September follows a revised increase of 103,000 jobs in August, indicating robust labor market dynamics. Nela Richardson, chief economist at ADP, commented, "Stronger hiring didn't require stronger pay growth last month. Typically, workers who change jobs see faster pay growth. But their premium over job-stayers shrank to 1.9 percent, matching a low we last observed in January." Mortgage applications also took a hit, declining by 1.3% for the week ending September 27, attributed to a slight uptick in mortgage rates, according to data released by the Mortgage Bankers Association.
This decline followed an 11% surge in overall activity during the previous week. In corporate news, Humana ($HUM) witnessed a steep drop of 13% intraday, marking it as the worst performer on the S&P 500 after revealing in a regulatory filing that the proportion of members enrolled in its Medicare Advantage Plans rated four stars or higher fell dramatically from 94% in 2024 to just 25% for 2025. Additionally, Nike ($NKE) shares fell by 6.5% during intraday trading, ranking among the largest decliners on both the S&P 500 and Dow as a result of reported lower earnings and revenue for fiscal Q1..