The US stock futures indicated a mildly positive start on Wednesday, 20 May, after remaining under pressure for the past three straight sessions, weighed down by rising bond yields and a lack of progress in negotiations between the US and Iran, which continued to keep market sentiment cautious.
Nasdaq 100 futures rose 0.8%, while S&P 500 futures gained 0.4%. Futures tied to the Dow Jones Industrial Average were also marginally higher by 0.2%.
In the previous session, all three major indices ended lower amid a sharp retreat in technology stocks and a spike in bond yields. The 30-year Treasury yield climbed one basis point on Wednesday to 5.19%, marking its highest level in nearly 19 years.
Meanwhile, the 10-year Treasury yield was little changed at 4.67% after touching a 16-month high of 4.7% in the previous session.
Higher bond yields have continued to cap Wall Street’s rally as speculation intensified that the US Federal Reserve may opt for another rate hike before year-end rather than a rate cut.
Energy prices have surged since the start of the Middle East conflict in late February. Earlier, markets had expected tensions in the region to ease, but delays in diplomatic progress have kept crude oil prices hovering near multi-year highs.
Technology stocks have so far supported Wall Street’s rally, but rising bond yields are increasingly weighing on the sector, as valuations remain heavily dependent on expectations of strong future earnings growth.
All eyes on Nvidia earnings
In terms of earnings, chip giant Nvidia is scheduled to report its first-quarter earnings after the market close.
According to Vested Finance, investors are treating Nvidia’s earnings as a major macro event, with expectations that the results could determine whether the AI rally still has momentum left or whether the semiconductor boom is beginning to slow.
Despite months of explosive gains across the broader AI trade, the brokerage highlighted that Nvidia itself has lagged behind several semiconductor peers this year. As a result, investors are now focusing less on headline growth and more on whether demand can continue accelerating amid rising competition and increasing concerns over valuations.
The broader AI rally has clearly cooled over the past week. However, the brokerage added that many investors still believe Nvidia has the ability to revive momentum if it delivers another strong quarterly performance and raises guidance once again.
Crude prices remain lower
WTI crude oil fell $3.13 a barrel on Wednesday to trade near $100.87, extending losses for a second straight session as hopes of a possible US-Iran agreement eased some geopolitical risk premium.
Brent crude also slipped another $3 to the day’s low of $108 per barrel.
US President Donald Trump said the conflict with Iran could end “very quickly,” while also warning that Washington could resume strikes in the coming days if negotiations fail.
In response, Iran’s paramilitary Revolutionary Guard reportedly issued a strongly worded statement on Wednesday, threatening to extend the Middle East conflict “beyond the region” if the US and Israel resume attacks against Tehran.
Kotak Securities expects the near-term crude oil direction to remain highly sensitive to geopolitical headlines, Strait of Hormuz shipping flows, and US inventory data. The brokerage said any diplomatic breakthrough may pressure prices further, while renewed supply disruptions could quickly revive bullish momentum across the crude complex.
US stocks in focus today
Lowe’s shares dropped 3% in pre-market trade after the company reported its first-quarter results, while Toll Brothers fell 2.36% following its fiscal second-quarter earnings announcement.
Meanwhile, Cava Group shares surged 8% to $84 after the company reported better-than-expected first-quarter earnings. Red Robin Gourmet Burgers also reacted positively to its earnings, with the stock jumping 10% in pre-market trade. Nvidia shares stood flat at $222 ahead of earnings.
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