U.S. stock markets opened higher on Wednesday, driven by a rally in semiconductor stocks as investors awaited Nvidia's quarterly earnings report after the closing bell. The S&P 500 gained 0.18% to 7,366.51, while the Nasdaq Composite climbed 0.45% to 25,988.36. The Dow Jones Industrial Average added 0.42%, reaching 49,573.21, according to LSEG data.
Nvidia shares rose 0.7% in early trading, reflecting cautious optimism ahead of its earnings release. The company is expected to report a 79% year-over-year revenue increase for the April quarter, which would mark its fastest growth in over a year, according to LSEG data cited by Reuters. Options markets are pricing in a potential 6.5% swing in Nvidia's stock value after earnings, equivalent to roughly $350 billion in market capitalization.
Other chipmakers also advanced as traders anticipated broader sector momentum. Marvell Technology surged 7.8%, Intel gained 6.3%, and Micron Technology rose 3.6%. The Philadelphia SE Semiconductor Index climbed 2.9%, underscoring the strength in the chip sector.
James McCann, senior economist at Edward Jones, noted that the bar continues to rise for companies like Nvidia. "It will be important for investors to see if Nvidia keeps clearing that bar," he told Reuters. Meanwhile, Chaim Siegel, an analyst at Elazar Advisors, highlighted a potential headwind: customers want more GPUs but "don't really have the data centers to put them into."
Bond markets provided some relief as the 10-year Treasury yield eased 3.4 basis points to 4.635%, pulling back from recent highs. This comes after a sharp jump on Tuesday, when the yield reached 4.687%, a level not seen since January 2025, as odds of a 25-basis-point Federal Reserve rate hike in December rose to 41.7%.
Oil prices fell sharply, with Brent crude dropping 4.31% to $106.48 per barrel, as traders reacted to new developments regarding the Iran conflict. Emril Jamil, an LSEG research analyst, warned that prices could still rise if supply does not recover soon after a potential deal.
In corporate news, TJX shares rose after the retailer raised its full-year sales and profit outlook, with HomeGoods showing particular strength. However, Target shares fell despite raising its sales-growth target for the year, as CEO Michael Fiddelke cautioned investors not to confuse progress with potential. Lowe's shares also declined after the home improvement retailer maintained its full-year outlook, citing ongoing weakness in the U.S. housing market.
Software stocks lagged again, with Intuit shares dropping after the company announced plans to cut approximately 17% of its workforce, or about 3,000 positions, as CEO Sasan Goodarzi shifts focus toward artificial intelligence and streamlining operations.
Investors remain cautious about the broader market, with many economists expecting the Fed to hold rates steady through the third quarter. A Reuters poll of 101 economists found that 83 expect the Fed to maintain its main rate at 3.50%-3.75% through the third quarter. Aditya Bhave, head of U.S. economics at Bank of America, said that while both hikes and cuts are feasible, a rate cut is more likely next year than this year.
Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions, cautioned that it's not just the level of rates but "the rate of change" that matters, as rapid moves tend to unsettle markets. With Nvidia's earnings, oil prices, and Fed minutes all on the horizon, the afternoon session could bring significant volatility.
