U.S. equity futures were modestly higher early Wednesday as investors awaited the Federal Reserve’s latest interest rate decision while continuing to track developments in the conflict involving Iran. Oil prices eased slightly but remained above the $100-per-barrel mark, keeping concerns alive that renewed inflation pressures could delay any potential Fed rate cuts later this year. In corporate news, memory-chip maker Micron is scheduled to release earnings after the close, while athleisure retailer Lululemon issued weaker-than-expected annual guidance.
Futures move higher
Futures tied to the main U.S. stock indices advanced on Wednesday morning as traders positioned themselves ahead of the Fed’s policy announcement and monitored geopolitical developments.
As of 04:18 ET, Dow futures were up 258 points, or 0.5%. S&P 500 futures rose 34 points, also 0.5%, while Nasdaq 100 futures gained 159 points, or 0.6%.
Wall Street’s major averages ended the previous session in positive territory. Analysts at Vital Knowledge said reports that two senior Iranian figures had been killed, along with the resignation of a Trump administration official in protest over U.S. strikes in Iran, had raised hopes that a ceasefire could eventually materialize.
Nonetheless, the Strait of Hormuz—one of the world’s most critical oil shipping routes, carrying roughly 20% of global supply—remains effectively closed due to threats of Iranian attacks on commercial vessels. President Donald Trump’s efforts to rally international backing to reopen the strait have largely failed.
Uncertainty also surrounds how long U.S. military operations will continue. Trump reiterated on Tuesday that the conflict could end soon, though similar comments since the start of the joint U.S.-Israeli campaign against Iran in late February have yet to lead to a ceasefire.
Oil retreats but remains elevated
Pressure on Trump to find a diplomatic exit appears to be increasing, including criticism from within his own Republican Party. However, there have been few signs that the U.S. intends to scale back its military campaign.
On Tuesday, U.S. forces struck Iran’s coastline near the Strait of Hormuz using 5,000-pound bombs, targeting cruise missile facilities capable of threatening ships passing through the waterway, according to the U.S. Central Command.
Brent crude futures, the global benchmark, fell 1.3% to $102.10 per barrel, while U.S. West Texas Intermediate crude futures declined 2.3% to $93.25 per barrel. The drop came after crude shipments resumed through a pipeline linking Iraq’s Kirkuk oil fields with Turkey’s Ceyhan port, providing some relief to markets worried about supply disruptions.
Even so, Brent remains far above its levels before the conflict began, pushing U.S. gasoline prices to their highest point since October 2023. Rising fuel costs could become a key issue ahead of the November midterm elections and may also contribute to broader inflationary pressures.
Fed policy decision ahead
Against this backdrop of geopolitical tensions and rising energy prices, the Federal Reserve is expected to announce its latest interest rate decision later Wednesday.
Financial markets widely anticipate that the central bank will keep rates unchanged following its two-day policy meeting as officials assess the outlook for inflation and recent economic indicators suggesting the U.S. labor market could be weakening.
Investors will be particularly focused on the press conference following the decision, led by Fed Chair Jerome Powell, who is expected to step down from the role in May. Powell may provide one of the earliest indications of how the Fed views the economic impact of the Iran conflict and the surge in oil prices.
Before the war began, investors had been expecting a possible rate cut later in the year, perhaps in the second half. However, analysts at ING said the ongoing conflict could lead the Fed to postpone any move toward monetary easing.
Micron earnings awaited
Investors will also be watching results from Micron (NASDAQ:MU), which is scheduled to report earnings after the market closes on Wednesday.
The company previously issued an optimistic adjusted profit outlook for its second quarter in December, driven by elevated memory chip prices amid persistent supply constraints.
As large technology companies continue to expand investments in artificial intelligence, demand for advanced data centers and the high-performance memory chips they require has also increased.
That trend could benefit Micron, whose chips are widely used in data center servers. The company projected fiscal second-quarter adjusted earnings of $8.42 per share, plus or minus $0.20—nearly double the analyst consensus cited by Reuters.
Chief Executive Sanjay Mehrotra told investors last year that tight supply in the memory chip market is likely to persist beyond 2026. He also said Micron may only be able to meet between half and two-thirds of demand from some key customers.
Lululemon forecast disappoints
Shares of Lululemon Athletica (NASDAQ:LULU) fell in premarket trading Wednesday after the athletic apparel retailer issued revenue and earnings guidance for 2026 that came in below analyst expectations.
The company also appointed a former Levi Strauss executive to its board of directors as speculation grows around a potential proxy contest.
Although Lululemon said “almost all” of the costs related to U.S. import tariffs would be offset through a strategy aimed at increasing full-price sales, the company continues to face multiple headwinds.
These include an extended search for a new chief executive, slowing consumer demand, and intensifying competition in the sportswear market.
Lululemon expects annual revenue of between $11.35 billion and $11.50 billion, compared with analyst forecasts of $11.52 billion, according to LSEG data cited by Reuters. The company also projected annual earnings of $12.10 to $12.30 per share, below Wall Street estimates.
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