Wednesday, September 2, 2026
Stocks Rebound as Dell Soars 7% on AI Guidance, but ADP's Weakest Jobs Print Since January Raises Stagflation Fears
Key Indicators
S&P 500
7,667.76
+0.48% (up)Nasdaq Composite
26,212.33
+0.43% (up)Dow Jones Industrial Average
52,989.25
+0.42% (up)10-Year Treasury Yield
~4.80%
little changed after 4.814% intraday high (unchanged)VIX
15.39
-5.81% (down)WTI Crude Oil
$90.68
+0.51% (up)Bitcoin (BTC/USD)
$77,395
-1.5% (down)Market Recap
S&P 500, Nasdaq, Dow all rise as markets recover from two-day Iran-driven selloff; VIX falls, yields pause near 19-month high
Stocks rebounded Wednesday after two straight losing sessions tied to the U.S.-Iran conflict. The S&P 500 rose 0.48% to close at 7,667.76, the Nasdaq gained 0.43% to 26,212.33, and the Dow added 0.42% to 52,989.25. The VIX fell 5.81% to 15.39 as investors bought back some of the protection they'd piled into over the prior two sessions. The 10-year Treasury yield held near 4.80%, pausing after touching an intraday high of 4.814% earlier in the session — its highest level since November 2023 — as the bond selloff that had been running since Monday took a breather.
Oil holds near $90 as U.S.-Iran conflict escalates further: Larak Island strike draws Iranian retaliation on Jordan bases
The conflict behind this week's volatility kept escalating. U.S. forces struck Iranian rocket launchers on Larak Island in the Strait of Hormuz on Sunday, aiming to stop further sea-mine attacks on shipping. Iran's IRGC retaliated Monday with ballistic-missile strikes on two U.S.-allied military bases in Jordan, which Jordan's army said caused damage after intercepting eight of the incoming missiles. WTI crude, which had already jumped 4.62% Tuesday, added another 0.51% Wednesday to $90.68 a barrel — a pause in the multi-day spike rather than a reversal, with traders still pricing in the risk of further escalation.
ADP: private payrolls grow just 38,000 in August, weakest since January, missing estimates ahead of Friday's jobs report
ADP's National Employment Report showed private employers added just 38,000 jobs in August, below the 47,000-48,000 economists expected and down from a downwardly revised 46,000 in July — the smallest gain since January. Education and health services, leisure and hospitality, and construction accounted for most of the growth, while manufacturing shed 17,000 jobs. Wage growth held up: base pay rose 3.2% year-over-year and total pay was up 4.7%. The soft print raises the stakes for Friday's official August jobs report from the Bureau of Labor Statistics, the last major labor-market read before the Fed's September 16 rate decision.
Dell soars 7.3% on blowout AI-server guidance, lifting Nvidia and the broader chip complex
Dell Technologies jumped 7.34% after Tuesday's blowout fiscal Q2 report: adjusted EPS of $7.04 versus $4.92 expected, and revenue of $46.97 billion versus $44.92 billion expected — up about 58% year-over-year. The company raised its full-year revenue guidance by $25 billion to $192 billion, including a record $74 billion from AI server sales, and guided fiscal Q3 to $6.50 in adjusted EPS on $49.0 billion in revenue, well above the Street's $4.49 and $41.42 billion estimates. Dell shares are now up roughly 236% year-to-date versus the S&P 500's 11% gain. The guidance raise rippled across the AI supply chain: Nvidia, which delivered its own blowout quarter on August 26, gained 4.61% Wednesday.
Palo Alto Networks, Credo Technology, and Palantir slide despite beating estimates as investors punish thin margins and stretched valuations
Not every earnings reaction went the AI complex's way. Palo Alto Networks fell further Wednesday after its fiscal Q4 report Tuesday: revenue of $3.41 billion (up 34% year-over-year) beat the $3.35 billion estimate and adjusted EPS of $1.02 topped the 98-cent estimate, with Next-Gen Security ARR up 63% to $9.10 billion — but the company posted a GAAP net loss of $282 million and its fiscal 2027 guidance failed to excite after a run of more than 112% year-to-date; shares fell about 5% in Tuesday's session and continued lower Wednesday. Credo Technology dropped roughly 7% even after posting 114.7% year-over-year revenue growth to $479 million and an EPS beat, as investors focused on GAAP gross margin slipping to 64.5% from 67.4% and operating expenses more than doubling. Palantir fell as much as 7.15% as its trailing P/E near 144x and sub-1% free-cash-flow yield left it exposed to the same profit-taking hitting richly valued AI names.
Concept of the Day
Stagflation Risk
Stagflation describes an economy stuck with two problems the standard policy toolkit can't fix at the same time: weak growth (or rising unemployment) alongside persistently high inflation. In the textbook case, a central bank fights inflation by raising interest rates, which slows the economy and cools hiring, or fights weak growth by cutting rates, which risks reheating inflation. When both problems show up together, either move makes the other one worse — there's no clean lever to pull. The term entered the vocabulary during the 1970s U.S. oil shocks, when OPEC supply cuts sent energy prices soaring at the same time unemployment climbed, and the Fed's eventual response — Paul Volcker pushing the fed funds rate above 19% in 1981 — only broke inflation at the cost of a severe recession. That episode is why markets get nervous any time a supply-side inflation shock (like an oil spike) coincides with softening labor data: it's the same combination that made the 1970s so hard to escape. The market signal to watch isn't a single data point but a pattern: an inflation-side shock (energy, tariffs, supply disruption) landing alongside a growth-side wobble (soft payrolls, rising claims, weak PMIs). Bond markets typically react by pricing a wider range of Fed outcomes and demanding a higher term premium for the uncertainty, since the central bank effectively has to choose which problem to prioritize.
Why it matters
Today's tape put both halves of the stagflation setup on the board at once: ADP showed private payrolls growing just 38,000 in August, the weakest since January, while WTI crude held near $90.68 a barrel after this week's Iran-driven spike — a supply-side inflation shock sitting right next to a growth-side wobble, two weeks before the Fed's September 16 decision. Neither data point alone spells stagflation, but the combination is exactly why the 10-year Treasury yield has been climbing toward multi-year highs even as growth data softens: bond markets are pricing the Fed's harder-than-usual choice between supporting a cooling labor market and containing an oil-driven inflation scare.
What to Watch
Thu, Sep 3
ISM Services PMI (August)
Services make up the bulk of the U.S. economy, and the prices-paid component is a key real-time inflation signal right after today's oil-driven price pressure and soft ADP print.
Fri, Sep 4
August Jobs Report (Nonfarm Payrolls)
The official, more comprehensive follow-up to today's soft ADP print (38,000, weakest since January) and the last major labor data before the September 16 Fed meeting.
Fri, Sep 11
Consumer Price Index (August)
The last inflation reading before the Fed's September decision, especially important given this week's oil-driven price pressure from the escalating Iran conflict.
Wed, Sep 16
FOMC Rate Decision
The Fed's decision now has to weigh a weakening labor market (today's soft ADP print) against oil-driven inflation risk from the Iran conflict — a genuinely difficult trade-off.