The S&P 500 opened lower on Wednesday, declining 22.37 points, or 0.30%, to 7,486.83, as escalating geopolitical tensions and renewed inflation concerns weighed on investor sentiment. U.S. Central Command confirmed that U.S. forces began another night of strikes against Iranian military targets at 6:45 p.m. ET — marking the 13th consecutive night of strikes aimed at holding Iran accountable and diminishing threats from the Islamic Revolutionary Guard Corps to commercial shipping. This follows the benchmark index's 0.89% rally to close at 7,509.20 on Tuesday. Polymarket traders had anticipated a weaker start, with the July 22 contract implying just a 15% probability that the index would open higher.

Geopolitical Tensions and Oil Prices

The ongoing U.S. strikes on Iranian military targets have kept energy markets on edge. Brent crude climbed above $92 a barrel on Wednesday, with the continued military campaign threatening to further disrupt commercial shipping and complicate the global inflation outlook. The resurgence in oil prices risks reversing some of the optimism generated by softer CPI and PPI reports earlier in the week. The escalation from the 11th to the 13th consecutive night of strikes underscores the sustained nature of the military campaign and its potential to keep energy prices elevated.

Market Drivers and Earnings Season

Investors are navigating one of the busiest stretches of earnings season, with Alphabet, Tesla, IBM, Texas Instruments, and AT&T all set to report results. Market participants are looking for evidence that spending on artificial intelligence infrastructure remains robust enough to justify elevated technology valuations, following a sharp bounce in semiconductor stocks during the previous session. Strategists have warned that companies face an unusually high earnings bar after the market's recent rally, suggesting that even solid results may not satisfy investors. Despite these headwinds, nearly 88% of S&P 500 companies that have reported second-quarter results have beaten analysts' profit estimates, according to FactSet.

Rate Hike Probabilities and Key Metrics

According to CME FedWatch, traders currently assign roughly a 24% chance of a July rate hike and about a 69% probability of at least a quarter-point increase by September. The following table summarises key market metrics at and around the open:

Previous Prediction Market Activity

The S&P 500 opened Tuesday at 7,489.95, above Monday's close of 7,443.28, meaning the July 21 Polymarket contract resolved "Up." That contract recorded approximately $20,156 in traded volume before settling, marking one of the quietest prediction markets in weeks. Activity has continued to fade following the heavy participation seen at the start of July, indicating trader caution despite the market's recent rebound.