U.S. stock index futures moved higher early Wednesday, with technology shares leading gains as investors focused on Nvidia's earnings report due after the market close. The moves come amid a three-day losing streak for Wall Street, with the S&P 500 and Nasdaq both declining as rising Treasury yields, higher oil prices, and renewed talk of a potential Federal Reserve rate hike weighed on sentiment.
Nasdaq 100 futures climbed 0.73%, while S&P 500 futures added 0.35% and Dow futures rose 0.11%. In premarket trading, Nvidia shares advanced 1.84%, recovering some ground ahead of its quarterly report. Other chipmakers also gained, with Micron up 4.14%, Intel up 4.22%, and AMD adding 2.02%.
Options markets are pricing a potential swing of 6.5% in Nvidia shares following the report, which would represent a market value shift of approximately $355 billion—a move larger than the entire market capitalization of most S&P 500 companies. Analysts surveyed by Reuters expect Nvidia's revenue to jump nearly 80% to around $79 billion, with close attention on data-center demand, profit margins, and cloud spending trends.
The broader market remains under pressure from bond market dynamics. The 10-year Treasury yield hovered near 4.647%, while the 30-year yield briefly touched 5.198%, a level not seen since 2007, before pulling back. Brent crude oil prices slipped 1.65% to $109.44 per barrel, adding to inflation concerns.
Investors are also awaiting the release of the Federal Reserve's minutes from its April 28-29 meeting at 2:00 p.m. EDT. The minutes are expected to provide further insight into the central bank's policy stance. According to a Reuters poll, most economists expect the federal funds rate to remain at 3.50%-3.75% through at least the third quarter, though both rate hikes and cuts remain possible.
Market strategists are cautious about the near-term outlook. Jefferies' Mohit Kumar advised clients to avoid longer-dated bonds, citing the oil shock and fiscal deficits as factors that could keep rates elevated. IG analyst Tony Sycamore described the recent pullback as a "corrective pullback" following a strong rally, and warned that Nvidia may find it harder to surprise investors this time around.
Other risks include a potential uptick in oil prices, further rises in long-end yields, or a more hawkish tone from the Fed minutes, any of which could stall the futures rally. A weak Nvidia outlook that fails to support further AI spending could also trigger a selloff. ORATS founder Matt Amberson noted that investors may be "complacent about AI/capex," while Susquehanna's Chris Murphy said traders are positioning for Nvidia upside but hedging with options on other chip stocks.
Premarket trading showed some improvement, but the overall mood remained cautious. Many traders are waiting for Nvidia's report and the Fed minutes to determine whether Tuesday's decline is a temporary setback or the start of a deeper correction.
