What Will Warsh Say? 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 point to a lower open as we begin Q3 2026.

1. U.S. stock futures were heading for losses to kick off the third quarter of the year. Markets are looking ahead to an appearance by Federal Reserve Chairman Kevin Warsh at a central-banking forum… Fed Chairman Kevin Warsh will participate in the annual policy panel at the European Central Bank forum in Sintra, Portugal, on Wednesday at 9 a.m. Eastern. His comments will be scrutinized for clues about the Fed’s future decisions on interest rates. (Barron’s) The first policy statement issued under Warsh was stripped of any guidance ‌about where ⁠rates might be headed, and in his press conference the new chair said he hopes that approach will wean markets off rate information he feels makes the central bank less nimble and investors less independent in their thinking. (Reuters)

After seeing Kevin Wash’s debut as Fed Chair at his first policy decision press conference, we have low expectations for what he may say about the course of U.S. monetary policy. Following that press conference, with scant new data on inflation, odds are Warsh’s comments will remain in the more hawkish camp, and odds are he will reiterate his pledge to get inflation back to 2%.

But with oil prices down more than 35% from late April, and gas prices declining, our view remains the market call for two rate hikes between now and Q1 2027 is overly aggressive. However, because we follow the data, we will be pouring over the inflation comments contained in this morning’s S&P Final June Manufacturing PMI and ISM Manufacturing PMI reports.

2. Tehran said it would not meet with top U.S. envoys who flew to the region following an outbreak of hostilities, suggesting that a breakthrough in peace negotiations was not imminent. (Reuters) President Donald Trump has considered a return to full-scale fighting amid frustration with Tehran but decided to continue diplomatic talks for now, The Wall Street Journal reported, citing U.S. officials. Trump has told aides that he is fine if negotiations drag on past the Aug.18 deadline for a nuclear deal, the Journal reported… (Barron’s)

We’ll avoid any political related comments and say that, in our view, it’s almost always a good sign when calmer heads prevail. Could we still see more saber rattling like over the past weekend as we close in on the August 18 deadline? We would not be surprised. For now, our focus will remain on the number of vessels crossing the Strait of Hormuz and the volume of oil, as well as other signs of supply chains getting back to normal.

3. A countdown to the expiry of the US-Mexico-Canada Agreement is set to begin as officials launch a review of the sweeping trade deal that President Donald Trump signed during his first term… Unlike the North American Free Trade Agreement which preceded it, USMCA includes a provision for the three countries to talk about renewal of the deal, starting this year. Unless it’s reauthorized — with or without changes — it would expire in 2036. (Bloomberg)

We do not expect clear cut-decisions to emerge in the near-term on this front, however, with the White House expected to rebuild its tariff wall, we recognize the likelihood of renewed trade tensions in the coming months. That has the potential to inject some fresh uncertainty in the market, especially after the robust 14.9% Q2 2026 gain for the S&P 500. And for those wondering, the Pro Portfolio notched a 19.7% gain for Q2 2026. We’ll have much more to say about that in the June Monthly Roundup that will be published later this week.

4. Nike shares fell 3.5% in premarket trading on Wednesday after its latest quarterly results failed to revive investor hopes of a swift turnaround under CEO Elliot Hill. A cautious sales outlook and weak China demand overshadowed a modest fourth-quarter ‌revenue beat, which also dragged down shares of European peers Adidas Moand Puma, dropping more than 1% each. (Reuters)

Comments from Nike (NKE) that jumped out at us from last night’s earnings call include:

“We know we’re not living up to our full potential, particularly in NIKE Sportswear and Jordan Streetwear, where sell-through remains challenged, impacting both current discounting and future order books. We’re operating in a more complex macro environment, where we’re seeing added pressure on traffic and discretionary spending across our geographies.”

To those comments, we’ll add that Nike noted that its growth margin for its fiscal fourth quarter of 2026 increased 890 basis points to 49.2%, “primarily due to the expected recovery of the IEEPA tariffs.” The company added that its North America business expects to recover $965 million in tariff refunds from the U.S. government, while its Converse business expects to recover $21 million.

That helped paper over issues in the quarter, but CFO Matt Friend also said the company is “not expecting the environment to improve meaningfully over the next six months.” To us, that will renew questions about Nike’s place in the Dow Jones Industrial Average.

5. Microsoft is reportedly planning to announce thousands of layoffs as the company aims to increase spending on artificial intelligence. The tech giant is expected to cut less than 2.5% of its overall workforce of about 220,000 people, according to people familiar with the matter, Business Insider reported on Tuesday night. They added that the layoffs are due to be announced next week, though the precise timing remains uncertain. (MarketWatch)

Before we jump to any big conclusions, let’s remember that Microsoft (MSFT) has announced “organizational shifts” as it enters its new fiscal year, which begins today. In July 2025, the company announced a restructuring that laid off ~9,000 employees, roughly 4% of its global workforce. In 2023 and 2024, smaller cuts were made.

This time around, layoffs are expected to come from sales and consulting as well as Xbox. Reports are also circulating that Microsoft is contemplating a spinoff or larger restructure for Xbox. Earlier this year, Meta (META) announced it will cut 10% of its workforce, Amazon (AMZN) said it will eliminate ~16,000 jobs globally, and more recently Elastic (ESTC) announced it would lay off 7% of its workforce.

The question we’re pondering is how much of this is normal cost cutting vs. adopting AI to do more heavy lifting? We may get some answers as companies report their Q2 2026 results in the coming weeks.

6. Citigroup slashed its 12-month forecasts for bitcoin and ether, saying weakening investor appetite, negative exchange-traded fund flows and a lack of progress on U.S. digital asset legislation have hurt the outlook for the two largest cryptocurrencies. The brokerage, ⁠in a note dated Tuesday, lowered its target for bitcoin to $82,000 from $112,000 and trimmed its ether forecast to $2,240 from $3,175… Citi’s bear-case scenario, which assumes recessionary macroeconomic conditions and continued ETF outflows, values bitcoin at $53,000 and ether at $1,094 over the next year. (Reuters)

We don’t have a dog in the crypto fight, but we continue to monitor developments and drivers for larger adoption. For us, U.S. crypto legislation remains a determining factor, and progress on that front remains slow.

7. Economic data today per TipRanks: Challenger Job Cuts (June), MBA Mortgage Applications Index (Weekly), ADP Employment Change (June), Fed Chair Warsh Speech (9:00 AM ET), S&P Global Final Manufacturing Index (June), ISM Manufacturing PMI (June), EIA Oil Stocks (Weekly).

8. Companies reporting today per TipRanks: AM – FactSet (FDS), General Mills (GIS), MSC Industrial (MSM). PM – Greenbrier (GBX).

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At the time of publication, TheStreet Pro Portfolio was long AMZN, META, and MSFT.