S&P Futures Slip as Middle East Crisis Weighs on Sentiment, U.S. ADP Jobs Report in Focus

December S&P 500 E-Mini futures (ESZ24) are trending down -0.37% this morning as flaring tensions in the Middle East dampened sentiment, while investors braced for the ADP National Employment numbers due later in the day.

Nike (NKE) slumped over -5% in pre-market trading after the world’s largest sportswear company reported weaker-than-expected Q1 revenue and withdrew its full-year sales guidance.

Market participants continue to keep a close watch on developments in the Middle East. Iran launched approximately 200 ballistic missiles at Israel on Tuesday in response to Israeli strikes on Hezbollah in Lebanon, marking a sharp but brief escalation between Middle Eastern adversaries, which risked sparking a new wave of attacks as Prime Minister Benjamin Netanyahu pledged to retaliate. Tehran warned that any retaliation would result in “vast destruction,” heightening fears of a broader regional conflict.

In yesterday’s trading session, Wall Street’s main stock indexes closed lower. Humana (HUM) plunged over -11% and was the top percentage loser on the S&P 500 after releasing its Medicare Advantage plan for 2025. Also, chip stocks lost ground, with Arm (ARM) slumping more than -4% to lead losers in the Nasdaq 100 and Intel (INTC) sliding over -3% to lead losers in the Dow. In addition, Apple (AAPL) fell nearly -3% after Barclays said that the availability of the iPhone 16 suggests “softer demand” compared to last year. On the bullish side, Paychex (PAYX) climbed about +5% and was the top percentage gainer on the S&P 500 after the payroll processing firm reported better-than-expected Q1 results.

A Labor Department report released on Tuesday showed that the U.S. JOLTs job openings unexpectedly climbed to a 3-month high of 8.040M in August, stronger than expectations of 7.640M. Also, the U.S. September ISM manufacturing index remained steady from August at 47.2, below the consensus of 47.6 and marking the sixth consecutive month of contraction. In addition, the U.S. S&P Global manufacturing PMI was revised upward to 47.3 in September, though it still declined from 47.9 in August. Finally, U.S. August construction spending unexpectedly fell -0.1% m/m, weaker than expectations of +0.2% m/m.

Meanwhile, U.S. rate futures have priced in a 63.2% chance of a 25 basis point rate cut and a 36.8% chance of a 50 basis point rate cut at the next FOMC meeting in November.

Today, all eyes are focused on the U.S. ADP Nonfarm Employment Change data, which is set to be released in a couple of hours. Economists, on average, forecast that the September ADP Nonfarm Employment Change will stand at 124K, compared to the previous number of 99K.

U.S. Crude Oil Inventories data will also be released today. Economists estimate this figure to be -1.500M, compared to last week’s value of -4.471M.

In addition, market participants will be anticipating speeches from Fed Governor Michelle Bowman and Richmond Fed President Thomas Barkin.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.767%, up +0.59%.

The Euro Stoxx 50 futures are up +0.42% this morning, partially recovering from losses in the previous session. Energy stocks led the gains on Wednesday as oil prices surged on the potential for supply disruptions in the Middle East. Defense stocks also gained ground. Data released by Eurostat on Wednesday showed that the Euro Area’s unemployment rate stood at 6.4% in August, unchanged from the previous month and marking a record low. Meanwhile, European Central Bank Vice President Luis de Guindos stated on Wednesday that Eurozone growth may be weaker in the near term than currently anticipated by the central bank, but the recovery is still expected to accelerate later. In other news, Citigroup said that it now anticipates the ECB will lower interest rates by 25 basis points at its October meeting. Investor focus is now on speeches from several ECB officials later today, including Lane, Elderson, and Schnabel. In corporate news, Jd Sports Fashion Plc (JD-.LN) fell over -4% as a weak update from its main partner Nike overshadowed the company’s better-than-expected results for the first half.

Eurozone’s Unemployment Rate was released today. 

Eurozone August Unemployment Rate came in at 6.4%, in line with expectations.

Japan’s Nikkei 225 Stock Index (NIK) closed down -2.18%, while mainland Chinese markets were closed for a holiday.

China’s Shanghai Composite Index was closed for the week-long National Day holiday. Mainland China’s financial markets will reopen on Tuesday, October 8th.

Japan’s Nikkei 225 Stock Index closed lower today, erasing gains from the previous session and tracking overnight losses on Wall Street as escalating tensions in the Middle East jolted risk sentiment. Technology and financial stocks led the declines on Wednesday. Data released by the Cabinet Office on Wednesday indicated that Japan’s consumer confidence index rose to a 5-month high in September, as sentiment improved regarding income growth, employment, and willingness to purchase durable goods. Meanwhile, investors continued to assess Japan’s political and economic outlook after the election of Shigeru Ishiba, who is viewed as a monetary policy hawk, as the country’s new prime minister. Ryosei Akazawa, the country’s new economics minister, stated Wednesday that the Bank of Japan should consider any additional interest rate hikes carefully to avoid the risk of excessively cooling the economy. Also, Shigeru Ishiba said late Tuesday that he expects the BOJ to maintain accommodative monetary conditions to assist the nation in fully exiting deflation. In corporate news, Inpex climbed over +4%, boosted by a spike in oil prices amid concerns that the conflict in the Middle East could disrupt supply. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +12.53% to 27.85.

The Japanese September Household Confidence arrived at 36.9, weaker than expectations of 37.1.

Pre-Market U.S. Stock Movers

Nike (NKE) slumped over -5% in pre-market trading after the world’s largest sportswear company reported weaker-than-expected Q1 revenue and withdrew its full-year sales guidance.

Resources Connection (RGP) fell more than -3% in pre-market trading after the company posted downbeat Q1 results.

T-Mobile US (TMUS) dropped about -0.8% in pre-market trading after Raymond James downgraded the stock to Outperform from Strong Buy.

Lamb Weston (LW) slid over -5% in pre-market trading after the company cut its FY25 EPS guidance and announced a restructuring plan.

Crescent Energy (CRGY) climbed more than +6% in pre-market trading after the S&P Dow Jones Indices announced that the company would replace Perficient in the S&P SmallCap 600 index, effective October 4th.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - October 2nd

Conagra Brands (CAG), RPM (RPM), Levi Strauss A (LEVI), Novagold (NG), Moolec Science (MLEC).

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