While the Iran war has driven investor sentiment for most of this week, the latest batch of U.S. data showed the power of hard, economic figures to move markets.

A new round of dip-buying was fueled on Wednesday by positive numbers on the U.S. economy. The ISM services index rose to its highest level since 2022, and private payrolls showed the strongest level of job growth in seven months. Analysts at ING noted the figures are consistent with gross domestic product growth of more than 3% this year. That might be a little short of the Trump administration’s projection of 4% to 5% growth but it’s not bad either.

Obviously the February data relate to a period before the start of hostilities in the Middle East. But that doesn’t mean investors are wrong to take into account the strength of the domestic economy as well as risks from the conflict. The main impact on Americans from the fighting is rising oil prices, which are roughly 13% higher than they were on the eve of the war. That will translate into some pain at the pump but the market is pricing in a reasonably swift reopening of the Strait of Hormuz and therefore a limited inflationary shock. 

Inflation is still a worry. The Federal Reserve’s Beige Book, released Wednesday, noted that all 12 regional Fed branches said prices increased in recent weeks. Higher costs for energy and raw materials will be exacerbated by shipping disruption. But tariff-driven price pressures could ease after a federal trade-court judge on Wednesday ordered the Trump administration to start refunding more than $130 billion collected in global levies invalidated by the Supreme Court last month.

Investors trying to gauge the direction of the U.S. market will be glued to news from the Middle East. But short of the war ending, the next big twist is just as likely to come from the official February jobs report on Friday, and that’s probably a good thing.

—Adam Clark

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Broadcom beat expectations for the first quarter thanks to strong demand for its critical hardware that powers artificial intelligence. CEO Hock Tan told analysts the chip maker has the “line of sight” to $100 billion of annual chip revenue in 2027 and has secured the supply chain to achieve that.

• Fiscal first-quarter adjusted earnings were $2.05 a share and revenue rose 29% from a year ago, to $19.31 billion. First-quarter AI revenue more than doubled to $8.4 billion, driven by strong demand for custom AI accelerators and AI networking, Tan said. 

• It would be making inroads on Nvidia, currently the leading provider of AI accelerators, which are the chips that train and run AI models. Its semiconductor solutions segment revenue of $12.52 billion beat estimates, while infrastructure software revenue of $6.8 billion just missed.

• Overall, first-quarter revenue rose 29% to a record $19.3 billion, and adjusted earnings before interest, taxes, depreciation, and amortization rose 30% from a year ago, to $13.1 billion. CFO Kirsten Spears said second-quarter revenue is expected to rise 47% from last year, to $22 billion.

• Broadcom returned $10.9 billion to shareholders in the first quarter, from $3.1 billion in cash dividends and $7.8 billion in stock buybacks. Its board approved a new $10 billion share buyback program.

What’s Next: Broadcom’s Tan also said second-quarter AI chip revenue is expected to be around $10.7 billion. It expects AI accelerator deployments across six customers, including OpenAI in 2027, to scale multiple gigawatts of computing power in 2027 and after.

—Angela Palumbo, Liz Moyer, and Janet H. Cho

The Court of International Trade appeared to trigger refunds for the thousands of companies that have paid the tariffs the administration applied last year using emergency powers but were struck down by the Supreme Court last month. The trade court said the refunds should come quickly.

• The decision, in a case brought by a business called Atmus Filtration, should trigger refunds on any of the emergency powers tariffs paid since late April, said Doug Jacobson, an international trade attorney for Jacobson Burton Kelley. The Penn Wharton Budget Model estimates that at $175 billion.

• The group that could benefit ranges from large retailers such as Costco Wholesale to logistics giant FedEx and numerous small businesses. The Trump administration has criticized the Supreme Court decision and argued that being forced to refund what it has already collected would be overly complicated.

• Judge Richard Eaton, who issued Wednesday’s ruling, indicated he would be the only judge who will hear cases relating to refunds for tariffs imposed using emergency powers. His message is simple, says Scott Lincicome, vice president of general economics at the Cato Institute: refund all importers, and do it fast.

• The trade court’s order also means refunds should effectively be automatic for all importers without any need to bring an individual lawsuit, as Costco Wholesale, FedEx, Kawasaki, and Toyota have done, Jacobson said. More than 2,000 lawsuits are pending at the Court of International Trade. 

What’s Next: In a perfect world for importers, Customers and Border Protection would automatically issue the refunds because it has digitized most customs entries. Importers could expect to be paid back in a matter of months this way, but the Trump administration is expected to seek a stay or extension.

—Reshma Kapadia, Sabrina Escobar, and Joe Light

The economy is showing moderate growth in seven of the 12 Federal Reserve Districts in the period measured in the central bank’s latest Beige Book survey. But five districts saw flat to declining activity, confirming the bifurcation in U.S. economic trends. Here are some revelations from the latest survey.

• Spending power is split in many districts, with high-income households still powering most of the growth. Luxury hotels in New York are charging record rates, upscale restaurants are full, Broadway ticket sales are running ahead of last year. But consumers are cutting back, in many cases more than before.

• Lower- and middle-income consumers are increasingly opting for store-label and value-focused products rather than national brands and deferring auto repairs and preventative healthcare procedures. In Atlanta’s region people are selling clothes online, scrapping metal, and leaning on buy-now-pay-later for basics.

• Many businesses across the country said they are using artificial intelligence to increase productivity, not to replace current employees. But a midsize manufacturer in Memphis told St. Louis Fed researchers that capital budgets were shifting toward robotics and industrial AI instead of hiring.

• Energy and data infrastructure projects are keeping construction, manufacturing, and even transportation afloat in districts where other businesses are cooling. In Cleveland, producers of metal products and electrical components said data-center build outs were their only area of growth. 

What’s Next: Separately, the White House formally sent Kevin Warsh’s nomination to become the next Fed chair to the Senate on Wednesday, but there is still one potential obstacle: Sen. Thom Tillis has vowed to block any Fed nomination until the Justice Department drops its investigation of Jerome Powell.

—Nicole Goodkind

President Donald Trump and executives at some of the biggest tech companies said at a White House event Wednesday they have a plan to keep AI data centers, which are heavy energy users, from driving up consumer electricity bills.

• Trump faces pressure to keep energy inflation down, at a time when the war in Iran is causing oil and gasoline prices to jump. Electricity prices rose 6.3% through January, despite Trump’s pledge to reduce prices by 50% by this year.

• The companies at the White House event—Alphabet’s Google, Microsoft, Meta Platforms, Oracle, xAI, OpenAI, and Amazon—said they have agreed to a “ratepayer protection pledge” to build, buy, or bring all the power they will need for their data centers.

• The tech companies have already been working on these kinds of deals, after the pushback against data centers escalated to the point where many projects were being blocked. More than $150 billion worth of the projects have been delayed or canceled since 2023, according to Data Center Watch, a research firm backed by AI security company 10a Labs.

• Big Tech’s decision to foot more of the electricity bill has begun to benefit companies that provide power and their stocks. The clearest beneficiaries are utilities such as Indiana’s NiSource and Louisiana’s Entergy.

What’s Next: While customers at certain utilities may start to see some bill relief in the coming years, it’s likely electricity prices will keep rising in the near term. The president seemed to acknowledge that. “Unfortunately it will take a little time to get there,” Trump said.

—Avi Salzman and Alex Kozul-Wright

AST SpaceMobile is racing against Elon Musk’s SpaceX to launch enough satellites into space to deliver 5G-quality voice, data, and video coverage to cellphones worldwide. It just announced Canadian communications firm Telus as a new partner and equity shareholder on Tuesday.

• AST also has agreements with dozens of major mobile network operators including AT&T and Verizon. However, it is facing off against a major rival in SpaceX, which this week confirmed the rebranding of its own direct-to-device offering as “Starlink Mobile.”

• SpaceX, presenting at the Mobile World Congress conference in Barcelona this week, says its next-generation satellites will deliver 5G speeds from space. Download speeds will be up to 150 megabits per seco