U.S. equity futures slipped on Wednesday as pressure in technology names intensified and renewed strains between the United States and Iran weighed on investor sentiment ahead of a pivotal inflation report.
Volatility has risen across markets in recent sessions as market participants wrestle with a cluster of risks. Those include elevated valuations in the technology sector, heightened tensions in the Middle East and the prospect that the Federal Reserve may need to lift interest rates further to tame inflation.
In premarket trading, Nvidia, Broadcom and Micron Technology each fell, with declines ranging from about 2% to 3.6%. Losses in these stocks accelerated after a short-lived rebound on Monday. Technology and artificial intelligence-focused shares also suffered steep declines on Friday following Broadcom’s disappointing outlook, which stoked fresh concerns about stretched valuations among chipmakers.
“The tech sector is coming under pressure from a combination of higher rate expectations, which lowers the current value of more distant profits, and anxiety over elevated valuations and uncertainties over the monetization of AI,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “Investors’ positioning in parts of the sector may have also become extended after a strong rally.”
By 05:29 a.m. ET, Dow E-minis were down 329 points, or 0.65%, S&P 500 E-minis were down 56 points, or 0.76%, and Nasdaq 100 E-minis were down 340.25 points, or 1.17%.
Tensions increased after U.S. military strikes targeted Iranian positions following President Donald Trump’s vow to retaliate for the downing of a U.S. Apache attack helicopter. The exchanges represent a fresh escalation that could unravel the fragile ceasefire between Washington and Tehran, according to the account in this report.
Oil prices were broadly steady, with Brent crude trading above $91 a barrel.
All eyes are on the May consumer price index, scheduled for release at 8:30 a.m. ET. The report is expected to offer insight into whether higher energy costs tied to the Iran conflict are feeding through to inflation. A Reuters survey of economists indicated the CPI likely rose 4.2% in the 12 months through May, which would be the largest annual increase since April 2023 and would follow April’s 3.8% gain.
Markets may also be watching how a much-hyped listing could affect sentiment. The planned SpaceX offering this Friday is described as a $1.75 trillion listing targeting a record $75 billion raise, and some market participants view that deal as a potential source of excess optimism that could pressure U.S. stocks.
Among individual movers, Super Micro Computer fell 8.5% after it announced plans to raise $7 billion via a mix of equity and equity-linked financings to fund component purchases for its expanding AI server business. Nike shares declined 1.6% after RBC downgraded the stock from "outperform" to "sector perform."
The report also included commercial commentary on an AI-driven stock selection tool that evaluates Nvidia monthly using more than 100 financial metrics and highlighted prior winners such as Super Micro Computer and AppLovin with significant past gains.
Market participants will be watching the CPI release closely for signs of stickier inflation that could prompt tighter monetary policy, while geopolitical developments and major corporate capital-raising plans add layers of uncertainty for equity valuations.