US Stock Market Steady Amid Sustained Rally, Oil Prices Near Historic High

Global Markets Remain on Edge Amid Ongoing Middle East Tensions

US stock futures were largely unchanged on Wednesday, 3 June, as the rebound in crude oil prices following renewed tensions in the Middle East kept Wall Street on edge. The S&P 500 futures were little changed, while Nasdaq 100 futures hovered around the previous session's closing levels. Futures tied to the Dow Jones Industrial Average slipped 0.3%.

The previous session saw all three major indices notch fresh record highs, supported by the continued rally in technology stocks even as hopes of a near-term peace agreement between the US and Iran continued to fade. Although US equities scaled new highs, gains remained capped as traders navigated geopolitical uncertainty alongside AI-driven optimism.

Tensions in the Middle East escalated after Iran launched ballistic missiles toward Bahrain, Kuwait, and other regional targets, though several were reportedly intercepted or failed to reach their intended locations. US President Donald Trump remained optimistic that the US could reach an interim peace agreement with Iran "over the next week." Earlier, Trump had stated that a memorandum of understanding to reopen the Strait of Hormuz could be achieved, although several key issues remain unresolved.

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The strikes came after semi-official Iranian news agencies reported that Tehran had halted communication with mediators regarding the extension of a ceasefire in the conflict involving the US and Israel. Meanwhile, US forces reportedly carried out strikes on Qeshm Island in response to attempted attacks by Iran.

The latest escalation has clouded the outlook for a near-term resolution in the region, keeping concerns alive that crude oil supply disruptions through the Strait of Hormuz could persist. Higher crude oil prices are also fuelling expectations that the US Federal Reserve could raise interest rates in 2026 rather than cut them. Beth Hammack said on Tuesday that the US central bank may need to raise interest rates if already elevated inflationary pressures continue to intensify.

Investors are now awaiting the release of private payrolls data later on Wednesday, with attention also turning to Friday's closely watched nonfarm payrolls report for further clues on the Federal Reserve's policy outlook. Market participants are also awaiting SpaceX's disclosure of the terms of its initial public offering, which is expected to become one of the largest IPOs in history. Reuters reported that Elon Musk's rocket launch, satellite, and AI company aims to sell more than 550 million shares at $135 apiece, valuing the IPO at around $75 billion.

Crude Oil Prices Extend Winning Streak

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Crude oil prices extended their winning streak to a third straight session, with Brent crude futures surging $3 per barrel to reach the day's high of $98.99, taking week-to-date gains to 7.75%. US crude futures advanced $3.24 per barrel to hit the day's high of $97, pushing their week-to-date gains to nearly 10%. Prices, which had remained under pressure over the past two weeks, regained strength following the latest escalation in West Asia.

Earlier this week, Iran reportedly said it could completely block the Strait of Hormuz and open additional fronts, including the Bab el-Mandeb Strait. The Bab el-Mandeb Strait is a critical global trade chokepoint connecting the Red Sea to the Gulf of Aden.

Stocks in Focus

Among individual stocks, KKR and Blackstone declined 5.8% and 3.9%, respectively, while Blue Owl Capital and Ares Management fell around 3% each. GameStop advanced 9.1% after reporting a rise in quarterly revenue and unveiling a $2 billion share buyback programme. According to brokerage firm Vested Finance, Marvell Technology surged again in premarket trading following a massive rally in the previous session. The move came after Nvidia CEO Jensen Huang suggested that the company could become the next trillion-dollar semiconductor business.

Investors will now turn their attention to Broadcom's earnings later today for another key read on AI spending trends. Other stocks, including Palo Alto Networks, fell 3% after reporting fiscal third-quarter results. Ulta Beauty gained 1% after raising the range for its full-year earnings guidance.