Wall Street's main indexes traded higher in late-morning action on Wednesday, snapping a two-day losing streak as market participants braced for a major earnings report from Micron Technology and a crucial inflation reading due Thursday. The S&P 500 gained 0.44%, the Nasdaq Composite rose 0.39%, and the Dow Jones Industrial Average climbed 0.53%, according to data delayed at least 15 minutes. Consumer discretionary and healthcare stocks led the advance, while energy shares lagged as crude oil prices slid.
The focus of the session squarely rests on Micron Technology (MU), which is set to report fiscal third-quarter results after the closing bell. The memory-chip maker has become one of the year's standout stories, with its stock surging roughly 740% over the past twelve months and pushing its market capitalization to approximately $1.20 trillion. Analysts project profit growth of more than 1,000% and revenue expansion of about 285% for the quarter, underscoring the immense demand for artificial intelligence-related chips. However, the lofty expectations have left little room for error. “When a stock is priced for perfection, perfection becomes the minimum requirement,” noted Kenny Polcari, chief market strategist at Slatestone Wealth. Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company, added that Micron's earnings are central to market sentiment this time around.
Beyond the earnings report, traders are grappling with several crosscurrents. The probability of a Federal Reserve rate hike in July stood at roughly 35%, according to CME FedWatch, while markets priced in more than a 70% chance of a move by September. The U.S. dollar hit its strongest level in 13 months, reflecting safe-haven demand amid geopolitical uncertainties. “The U.S. dollar is still the preferred safe haven,” said Ray Attrill, head of FX strategy at National Australia Bank. The upcoming release of the Personal Consumption Expenditures (PCE) price index on Thursday at 8:30 a.m. EDT will be closely watched for signs of inflation. The April report showed a 3.8% year-over-year increase, and the May data will provide further clues on the trajectory of price pressures.
In commodities, oil prices tumbled, with Brent crude falling more than $3 to $73.76 a barrel, touching levels not seen since before the Iran conflict. Traders cited improved tanker movements through the Strait of Hormuz and expectations that Iranian oil could re-enter global markets. “The market is pricing in the broader scenario of Iranian oil re-entering the global market,” said Tim Waterer, chief market analyst at KCM Trade. The drop in crude weighed on energy stocks, with the S&P 500 energy sector declining 2.3%.
On the economic front, new U.S. single-family home sales fell 7.3% in May to a seasonally adjusted annual pace of 580,000 units, with the median price at $424,900. Higher mortgage rates and elevated prices continued to weigh on buyer demand, according to Reuters. Meanwhile, J.P. Morgan raised its S&P 500 year-end target to 7,800 from 7,600, citing upbeat earnings from AI spending and ongoing economic strength. The firm's new 2026 EPS forecast stands at $350. The index had risen 7.6% year-to-date ahead of Wednesday's move.
In other corporate news, Cerebras Systems shares dropped roughly 14% after the AI-chip company forecast its full-year adjusted gross margin would slip below first-quarter levels, falling well short of Nvidia's (NVDA) mid-70% and AMD's (AMD) mid-50% margins. Despite the outlook, Morgan Stanley analyst Joseph Moore noted that with demand exceeding supply and no major bottlenecks, there is room for material upside. FedEx (FDX) shares fell 2% as slimmer margins in its main delivery unit raised new concerns following the FedEx Freight spinoff. Operating margin at Federal Express came in at 7.7%, down from 8.4% a year earlier, due to higher costs for labor, transport, and fuel.
Looking ahead, the rally faces potential headwinds if Micron delivers a weak forecast, the PCE reading runs hot, or traders begin pricing in faster Fed rate hikes. Any setback in U.S.-Iran talks could drive oil prices higher and reignite inflation fears that earlier this year pushed yields and mortgage rates upward.
