The four numbers Thursday is opening on.
Wednesday’s reversal of the nine-day winning streak, the Iran-US strike exchange that pushed Brent back above $97, Broadcom’s after-hours guidance miss despite record AI revenue growth, and tomorrow’s May payrolls release combine into the four readings that frame the open. The detailed account follows in the section below.
7,553.59
S&P 500 (Wed close)
−0.74% · 9-day win streak snapped
$97.81
Brent (Wed close)
+1.89% · US-Iran strike exchange
−13%
Broadcom · after-hours
Q2 rev miss · AI semis +143% YoY underlying
cons 165k
May payrolls · Friday
September cut now 70%; ADP +122k Wed
A winning streak ends as Iran tensions return; AI guidance disappoints.
Wednesday brought the S&P 500’s first decline in ten sessions as the Iran story sharpened. Iran launched missiles at targets in Kuwait and Bahrain overnight, and the United States responded with strikes on Iranian assets at Qeshm Island. Markets reacted accordingly: the S&P 500 fell 0.74% to 7,553.59 (off Tuesday’s first-ever close above 7,600), the Nasdaq Composite dropped 0.89% to 26,852.86, and the Dow lost 620 points (−1.21%) to 50,687.45 — its worst session since March. The Russell 2000 fell 1.25%. Brent crude rose 1.89% to $97.81 and WTI added 2.41% to $96.02 on the renewed conflict; the dollar firmed and gold added 0.86%. The Vault Hormuz indicator stays RESTRICTED with throughput retreating to roughly 6.8 million barrels a day, the lowest level in three weeks.
The macro backdrop also turned firmer for inflation. April ADP private payrolls came in at +122,000 versus the +117,000 consensus, with the prior month revised down to +105,000; ISM Services PMI was firm, and the price-paid component within the survey rose to a near four-year high — a clear signal that services-sector pricing pressure is not easing. The 10-year Treasury yield added 4 bps to 4.51% and the 30-year reached 5.04%; the September rate-cut probability in Fed funds futures slipped from 73% to 70%. The Powell-era policy framing continued under Warsh remains explicit on patience until the supercore (services ex-housing PCE, currently 3.05%) breaks decisively below 3% — and yesterday’s ISM Services prices reading pushes the supercore in the wrong direction. Friday’s May payrolls release becomes the single most important macro data point of the month.
After the close, Broadcom reported Q2 FY26 with record revenue of $22.2 billion (+48% YoY) and AI semiconductor revenue of $10.8 billion (+143% YoY) — both at the high end of the company’s strong execution track. Q3 guidance was set at $29.4 billion in revenue (+84% YoY), with AI semis guided to over $16 billion (+200% YoY). Despite the absolute strength, the stock fell 13% in after-hours trading after the revenue line came in slightly below the most stretched analyst expectations — the buy-side bar going in was unusually high after Marvell’s 33% session Tuesday. CrowdStrike fell 10% on Q2 revenue guidance that disappointed, despite a Q1 result that came in line with consensus. Today’s calendar is light: weekly jobless claims, trade balance and Q1 productivity at 08:30 ET, plus several Fed speakers ahead of tomorrow’s May payrolls release (consensus 165,000 jobs with unemployment at 4.2%).
A clear risk-off day: stocks down, oil up, bonds soft.
Wednesday’s session was a clean directional move in the opposite direction to the prior week. The S&P’s nine-day winning streak snapped as Iran tensions returned, with Brent jumping nearly 2% on the strike exchange and gold catching a haven bid. Longer-dated Treasury yields rose another 4 bps as hot ISM Services prices reinforced sticky-inflation concerns; the dollar firmed. Broadcom and CrowdStrike’s after-hours reactions show how high the buy-side bar has moved for AI names — even +143% YoY AI semi growth at Broadcom was not enough to clear the expectations going in.
7,553.59
S&P 500 (Wed close)
−0.74% · 9-day win streak snapped
$97.81
Brent (Wed close)
+1.89% · US-Iran strike exchange
−13%
Broadcom AH
AI semis +143% YoY · expectations higher still
70%
Sep cut probability
eased 3 pts on hot services prices · payrolls Friday
first decline in 10 sessions · Iran strikes + hot services prices
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Iran strikes on Kuwait + Bahrain; US strikes on Qeshm Island
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ISM Services price index near 4-yr high · September-cut probability to 70%
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Note: yield-up = red, yield-down = green (bond-price convention).
AI semis +143% YoY · Q3 guide $29.4B · expectations had moved faster
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Seven names, seven weeks: AI capex still strong; expectations getting stretched.
Chart of the Day · AI Capex Confirmations
Seven names in seven weeks: still strong, but the bar keeps rising.
Since NVIDIA's Q1 FY27 result on 24 April, seven AI-infrastructure earnings or announcements have collectively re-confirmed AI capex as the largest infrastructure cycle in 25 years. NVIDIA delivered +69% YoY revenue growth on AI compute; Micron crossed $1 trillion in market capitalisation on AI memory; Dell reported a $43 billion AI-server backlog with FY27 AI revenue guidance of approximately $50 billion; Snowflake announced a $6 billion AWS deal with Q1 product revenue +34% YoY; HPE delivered a $790 million Q2 revenue beat with the stock +20% after-hours; Marvell jumped 33% on Huang's Computex remarks and the Nvidia $2 billion investment in custom silicon; and yesterday Broadcom reported record revenue of $22.2 billion with AI-semi revenue growing 143% YoY to $10.8 billion — and a Q3 guide calling for AI semi revenue above $16 billion (+200% YoY). The Broadcom result was the strongest absolute print of the run, yet the stock fell 13% in after-hours as analyst expectations going in were higher still.
Sources: NVIDIA Q1 FY27 SEC filing; Bloomberg market-cap data for Micron; Dell Technologies fiscal 2026 investor releases; Snowflake Q1 FY28 SEC 8-K filing; HPE Q2 FY26 SEC 8-K filing (1 June 2026); Marvell Technology press / NVIDIA Computex 2026 keynote (2 June 2026); Broadcom Q2 FY26 SEC 8-K filing (3 June 2026). Magnitude metric reflects either YoY revenue growth or single-day stock move.
Three headlines shaping today's session.
Geopolitics
Iran strikes Kuwait and Bahrain; US hits Iran's Qeshm Island
Wednesday saw the largest re-escalation of the conflict since late May. Iran launched missiles at targets in Kuwait and Bahrain — with limited damage reported in both cases — and the United States responded with strikes on Iranian military assets at Qeshm Island in the Strait of Hormuz. Brent crude rose 1.89% to $97.81 and WTI added 2.41% to $96.02 on the news; the Vault Hormuz indicator slipped to roughly 6.8 million barrels a day, the lowest level in three weeks. The framework reconvergence path is still open in principle, but the diplomatic window has tightened. The Pakistani-led mediation continues; Iran's response to Trump's edits has not yet been delivered. Tomorrow's Friday news flow on the diplomatic channel is the next test.
CNBC · StockTwits · Reuters · Wed 3 Jun
AI Capex
Broadcom delivers record revenue — but stock falls 13% after-hours
Broadcom reported Q2 FY26 revenue of $22.2 billion (+48% YoY), with AI-semiconductor revenue of $10.8 billion (+143% YoY) — both record highs. Q3 guidance was set at $29.4 billion (+84% YoY), with AI semis expected above $16 billion (+200% YoY). Despite the absolute strength, the stock fell 13% in after-hours trading after the revenue line came in slightly below the most stretched analyst forecasts; the buy-side bar going in was unusually high after Marvell's 33% session on Tuesday. CrowdStrike fell 10% on Q2 guidance that disappointed, despite an in-line Q1 result. The takeaway for investors: AI fundamentals remain strong, but expectations have moved alongside the prices, so clean beats now need to be bigger to be rewarded.
Broadcom IR · CNBC · Motley Fool · Wed 3 Jun AH
Macro
Hot ISM Services prices push September rate-cut probability lower
April ADP private payrolls came in at +122,000 (vs +117,000 consensus, prior revised lower to +105,000) — a modest beat that doesn't change the labour-market picture meaningfully. The bigger surprise was the May ISM Services PMI report: while the headline reading was firm, the price-paid component rose to a near four-year high, signalling that services-sector pricing pressure is not easing. The 10-year Treasury yield added 4 bps to 4.51%; the September rate-cut probability in Fed funds futures slipped to 70%. The Powell-era policy framing under Warsh requires the supercore (services ex-housing PCE, currently 3.05%) to break below 3% — yesterday's ISM read points in the opposite direction. Friday's May payrolls release is now critical.
ADP · ISM · BLS · Schwab · Wed 3 Jun
GCC risk premium widens sharply as Iran attacks Kuwait and Bahrain.
Wednesday’s Iran strikes on Kuwait and Bahrain — the first direct attacks on GCC capitals in the current conflict — pushed the regional risk premium sharply wider. Qatar’s 5-year CDS spread widened 12 bps; UAE 10-year eurobond spreads gave back another 5 bps; Saudi 5-year CDS moved 8 bps wider; and the new attention turned to Kuwait and Bahrain themselves — Kuwait’s 5-year CDS widened 18 bps and Bahrain’s 22 bps, both meaningful single-day moves. The escalation was limited (Iranian missiles inflicted limited damage in both Kuwait and Bahrain, and the US response on Qeshm Island appears tactically contained), but the symbolism of striking the GCC’s eastern flank is significant for the medium-term diplomatic framework. ADX fell 1.6% with Aramco −0.8% and ADNOC −0.4% (oil-linked names cushioned by Brent’s pulse higher); Qatar Stock Exchange −1.2%; Tadawul −1.0%; Kuwait Boursa −2.1%.
Vault Wealth’s house view as the regional conflict pulse re-intensifies: clients should hold their overweight to GCC equities but tilt the sector mix back toward upstream energy (Aramco, ADNOC) and away from financials while Brent remains above $95; reduce direct exposure to Kuwait and Bahrain sovereigns until the strike pattern stabilises. The reconvergence path on the Iran-US framework remains open in principle, but the diplomatic window has tightened — Trump’s edits, Iran’s pending response, and now the new front in Kuwait and Bahrain create more moving pieces. The Vault Hormuz indicator at 6.8 mb/d is the single forward-looking signal of whether the escalation deepens further. Today’s main regional read is whether overnight remained quiet after the Wednesday exchange.
Qatar 5-yr CDS
+12 bps Wed
First direct strikes on GCC capitals
Kuwait 5-yr CDS
+18 bps Wed
Bahrain CDS +22 bps · new geographies
Hormuz indicator
~6.8 mb/d
RESTRICTED · lowest level in three weeks
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Three things investors should watch into Friday's payrolls.
Wednesday’s session reset the week’s tone — the AI rally paused on stretched expectations and the soft-landing read complicated as Iran tensions and US services-pricing pressure both moved against it. Friday’s payrolls is the binary into the weekend.
Watch 01
Friday's payrolls release is the single anchor of the week
Consensus for May payrolls is 165,000 jobs with the unemployment rate at 4.2% and average hourly earnings growth of 0.3% MoM. After yesterday's hot ISM Services prices, the September rate-cut probability in Fed funds futures slipped to 70% from 73% on Tuesday. A below-130,000 number combined with sub-0.3% wage growth would restore the September cut as the comfortable base case and reinforce demand for longer-dated bonds; a 200,000-plus number with strong wages would push the cut conversation into late autumn and pressure both equity multiples and bond prices. The Powell-era framing — continued under Warsh — remains explicit on patience until the supercore breaks decisively below 3%. Vault Wealth's house view is that a 150,000–180,000 print with in-line wages keeps the September call live; anything outside that band moves the conversation materially.
Watch 02
Iran tensions returned to direct GCC attacks for the first time
Wednesday's strikes were notable for both volume and geography. Iran missiles hit targets in Kuwait and Bahrain — the first direct strikes on GCC capitals in this phase of the conflict — and the US response on Qeshm Island sits in the Strait of Hormuz itself. The diplomatic framework has not closed; Trump's edits are still in mediation channels, and Iran's official response is pending. Brent at $97.81 reflects renewed risk; the next directional move depends on whether the strike exchange continues today and tomorrow or eases back. The Vault Hormuz indicator at 6.8 million barrels a day is the single forward-looking signal of whether the regional risk premium continues to widen or stabilises.
Watch 03
AI fundamentals strong; expectations are now in line with them
Broadcom's record revenue and +143% YoY AI-semi growth, with Q3 AI semis guided above $16 billion (+200% YoY), reads as the strongest single fundamental result of the seven-name AI confirmation run since April. Yet the stock fell 13% after-hours because the buy-side bar had moved faster than the fundamentals over the past two weeks — and CrowdStrike's −10% reaction on guide tells the same story. The investor implication is that valuation discipline now matters more for the AI complex: the next wave of confirmation needs to clear higher bars to be rewarded. Vault Wealth continues to recommend exposure to the broader AI build-out (Vertiv, Amphenol, ASML, LRCX) and selective additions to leaders on weakness (Broadcom on the dip, Marvell, HPE).