U.S. stock index futures moved modestly higher on Wednesday as a rebound in semiconductor shares tempered broader market pressure ahead of Nvidia's quarterly results. Nvidia, described in market commentary as the world's most valuable company and a focal point of the global AI boom, rose 1.6% in premarket trading as investors prepared for its earnings report due after the closing bell.
Market participants said the upcoming Nvidia numbers will be parsed for evidence that demand for AI infrastructure remains robust enough to support high valuations across the technology and AI sectors.
Chipmakers broadly contributed to the advance in futures. Marvell Technology climbed 5%, Intel gained 4.9% and Micron Technology added 3.9%. The iShares Semiconductor ETF rose about 2%, helping lift equity futures.
The gains in technology were set against a backdrop of higher bond yields earlier in the week, which had pressured U.S. equities. A selloff in global government bond markets pushed yields up and prompted traders to increase bets that the Federal Reserve could raise interest rates around the turn of the year, a shift partly attributed in market commentary to rising oil prices related to conflict in the Middle East.
After touching a 16-month high of 4.687% in the previous session, the benchmark 10-year Treasury yield eased to 4.6533% on Wednesday.
Brent crude futures slipped 1.8% to $109.29 a barrel following comments from U.S. President Donald Trump, who said the war with Iran would end "very quickly." Despite that remark, investors remained cautious about the prospects for peace talks as disruptions to Middle Eastern supply were ongoing.
At 05:39 a.m. ET, Dow E-minis were up 34 points, or 0.07%; S&P 500 E-minis had gained 19.5 points, or 0.26%; and Nasdaq 100 E-minis added 169.25 points, or 0.59%.
Traders are also waiting for the minutes from the Fed's most recent policy meeting for additional insight into policymakers' thinking, as expectations for a rate hike in December have increased. Markets were pricing in a better-than-40% chance of a 25-basis-point rate hike in December, according to CME's FedWatch tool. The probability of a 50-basis-point move that month rose to 13.5% from 4.2% a week earlier.
Among other notable movers on the day, Analog Devices rose 3.8% after announcing that it would acquire Empower Semiconductor for about $1.5 billion in cash, expanding its AI-focused power management portfolio.
Key points
- Chip sector recovery led futures gains, with Nvidia up 1.6% premarket and notable strength at Marvell, Intel and Micron.
- Elevated Treasury yields and oil price moves continue to influence market sentiment and Fed-rate expectations.
- Investors are awaiting Nvidia’s earnings and the Fed minutes for guidance on AI demand and monetary policy, respectively.
Risks and uncertainties
- Persistence of higher bond yields could keep pressure on equity valuations, particularly in growth and technology sectors.
- Geopolitical developments in the Middle East and related disruptions to oil supply leave energy markets and inflation expectations uncertain.
- Markets remain sensitive to the Fed’s policy outlook; changes in rate-hike probabilities could shift sentiment across equities and fixed income.
Investors will be closely digesting Nvidia's results after the bell for confirmation that AI-related spending is sufficient to justify the sector's lofty valuations. Meanwhile, the sequence of central bank communications and geopolitical developments will likely influence near-term risk appetite across equity, bond and commodity markets.