8 Key Items Shaping the Stock Market Wednesday

These are the early headlines and other items poised to influence the market at the start of trading Wednesday. As we share this collection of market drivers, U.S equity futures have bounced around this morning but point to a higher open.

1. U.S. stock ​index futures edged higher on Wednesday as investors weighed a report signaling efforts to end the five-day Middle East conflict and ‌took heart from President Donald Trump's efforts to stabilize oil markets. Futures turned higher after a New York Times report said Iranian intelligence operatives indirectly reached out to the CIA a day after the attacks, but U.S. officials remain skeptical that either the Trump administration or Iran is prepared for a near-term de-escalation. (Reuters)

2. In public, Iran’s surviving leaders have defiantly refused to negotiate with President Trump to end the American and Israeli assault on their country. But a day after the attacks began, operatives from Iran’s Ministry of Intelligence reached out indirectly to the C.I.A. with an offer to discuss terms for ending the conflict, according to officials briefed on the outreach. U.S. officials are skeptical — at least in the short term — that either the Trump administration or Iran is really ready for an offramp, the officials briefed on the outreach said. (The New York Times)

3. Treasury Secretary Scott Bessent said that President Donald Trump’s plan to increase a 10% universal tariff up to 15% will likely be done this week… “It’s my strong belief that the tariff rates will back to their old rate within five months,” Bessent said. “They are very slow moving, but they are more robust,” he said of the so-called sections 301 and 232 tariffs that are planned to replace the invalidated IEEPA duties. US stock futures erased gains after Bessent’s comment on the higher tariff. (Bloomberg)

The combination of those first three items explain the back and forth we’ve seen with U.S. equity futures this morning. They remind us that we should continue to focus on the duration of the U.S.-Iran conflict to gauge the extent of near-term disruption and inflation pressures. A key signal to watch will be oil prices, which, as of this writing, were moving lower

While there is much focus on that conflict, Bessent’s comment reminds us there are other balls in the air, and to that we’ll add upcoming U.S.-China trade negotiations. Top U.S. and Chinese trade ‌negotiators are expected to meet in mid-March, ahead of a summit between President Trump and China's leader Xi Jinping.

4. CrowdStrike said Tuesday that it’s seeing growing demand for its cybersecurity tools as artificial intelligence makes attacks more sophisticated. That helped drive a slightly stronger-than-anticipated outlook for the current period... CrowdStrike’s management positioned the company as an AI beneficiary instead. Kurtz said on the earnings call that the company is seeing “elevated demand” for its Falcon cybersecurity platform as AI is “weaponizing adversaries to attack with increased speed, sophistication and precision.” (MarketWatch)

Those comments from CrowdStrike  (CRWD)  reinforce our view that in addition to being a productivity tool, AI will be used by bad actors to increase the vector and velocity of their attacks. This keeps us long-term bullish on cybersecurity, and we continue to like the diversified approach granted to us by the First Trust Nasdaq Cybersecurity ETF  (CIBR) . We continue to rate CIBR shares a One.

5. Beth M. Hammack, head of the Federal Reserve Bank of Cleveland, says it is too early to gauge the economic impact of the Iran war and backs holding interest rates steady for “quite some time.” (The New York Times)

Coming up at 10 AM ET, ISM will publish its February Service PMI report, and the market expects a modest cooling in headline activity to 53.5. Given the renewed focus on inflation, if the Services Prices Index steps up from January’s reading of 66.6, paired with the recent move in oil prices, we’re likely to see more Fed officials take a more conservative tone on the topic of rate cuts. We’ll also want to check the latest Fed Beige Book out this afternoon for color on job creation and inflation pressures.

Setting the stage for today’s data, ADP’s February Employment Change Report showed companies added 63,000 workers during the month, up from the downwardly revised 11,000 in January and better than the 48,000-consensus forecast.

6. Japan ​and the United States are working to include a nuclear power project in the second ‌round of deals under Japan's $550-billion investment package, two people with knowledge of the matter told Reuters on Wednesday. The nuclear power project, which the sources say will involve Westinghouse, is designed to strengthen both countries' energy supply chains as war in ​the Middle East renews concerns about energy security. (Reuters)

Over the last few quarters, we’ve seen signs of increasing adoption of nuclear power, and if this comes to pass it would be a reason for us to revisit shares of the VanEck Uranium and Nuclear ETF  (NLR)  or perhaps consider a model strategy like the one we use for EPS Diplomats.

7. Economic data today per TipRanks: MBA Mortgage Applications Index (Weekly), S&P Global Services PMI (February), ISM Services PMI February), EIA Oil Inventories (Weekly), Fed Beige Book.

8. Companies reporting today per TipRanks: AM - Abercrombie & Fitch  (ANF) , Bath & Body Works  (BBWI) , Brown-Forman  (BF.B) , Dycom  (DY) . PM – American Eagle  (AEO) , Broadcom  (AVGO) , Cracker Barrel  (CBRL) , Okta  (OKTA) , StubHub  (STUB) , WeBull Corp. (BULL). 

At the time of publication, TheStreet Pro Portfolio was long CIBR and AVGO.