U.S. stock index futures climbed sharply on Wednesday morning, propelled by a strong revenue forecast from chipmaker Advanced Micro Devices (AMD) and growing optimism over diplomatic progress between the United States and Iran to end the Gulf conflict. The moves suggest Wall Street is poised to extend Tuesday's record highs for the S&P 500 and Nasdaq.
As of 6:46 a.m. EDT, Dow Jones Industrial Average futures surged 558 points, or 1.13%, while S&P 500 futures gained 72 points, or 0.99%. Nasdaq 100 futures advanced 451 points, or 1.60%, and the small-cap Russell 2000 index futures rose 57.7 points, or 2.02%, based on 10-minute delayed data from Investing.com.
The rally was fueled by two key catalysts. First, AMD projected second-quarter revenue of approximately $11.2 billion, plus or minus $300 million, exceeding the consensus estimate of $10.52 billion. The company cited robust demand for its data-center products, particularly for artificial intelligence workloads. 'AI compute demand was real,' said Jake Behan, head of capital markets at Direxion, noting that investors are now watching whether AMD can translate this into high-margin revenue.
Second, hopes for a diplomatic breakthrough in the Middle East drove a sharp decline in oil prices. A Pakistani source familiar with the negotiations indicated that the U.S. and Iran are close to signing a one-page memorandum to halt the Gulf conflict, though no official deal has been reached. Brent crude futures plummeted 8.44% to $100.60 per barrel, while U.S. crude also fell sharply. The drop in oil prices provided a tailwind for equities by easing inflation concerns and reducing pressure on the Federal Reserve to maintain aggressive interest rate hikes.
AMD shares surged nearly 18% in pre-market trading, pulling up rivals in the semiconductor space. Intel (INTC) added 6%, and Arm Holdings (ARM) climbed 11%. The broader rally in chip stocks reflected renewed investor appetite for central processing units (CPUs) and graphics processing units (GPUs), which are essential for AI model training and inference. Super Micro Computer (SMCI) also gained after projecting fourth-quarter revenue and adjusted profit above analysts' expectations, citing strong demand for its AI servers.
The positive earnings season continued to support the market. With more than half of S&P 500 companies having reported, first-quarter earnings growth is on track to reach 28.2%, the strongest since the fourth quarter of 2021, according to LSEG data. 'It's been earnings that have driven the move higher,' said Chris Fasciano, chief market strategist at Commonwealth Financial Network.
However, analysts caution that the rally is vulnerable. Kyle Rodda, senior financial market analyst at Capital.com, noted that markets are relying on the hope that the Middle East conflict does not escalate again, which could undermine the earnings-driven advance. If that bet fails, risk assets could reverse sharply.
On the economic data front, investors are awaiting the ADP private payrolls report for April, due at 8:15 a.m. ET, followed by the Labor Department's employment report on Friday. Economists expect payroll gains of 62,000 and the unemployment rate to hold steady at 4.3%. The labor market remains tight, which keeps expectations for Federal Reserve rate cuts minimal.
