U.S. stock futures traded unevenly on Wednesday morning as investors weighed strength in major technology names against fresh inflation data that heightened concerns over interest rates and rising costs.
Nasdaq-linked futures outperformed ahead of the open, supported by gains in chipmakers, while sentiment across the broader market remained more cautious.
Nvidia helps lift semiconductor shares
Technology stocks appeared poised to lead early market gains, with Nvidia (NASDAQ:NVDA) climbing 1.6% in premarket trading.
The move followed confirmation that Nvidia CEO Jensen Huang would accompany U.S. President Donald Trump during his visit to China for talks with Chinese President Xi Jinping.
Reports indicated Huang was added to the delegation shortly before departure, boosting optimism across the semiconductor industry before trading began.
Producer inflation exceeds forecasts
Outside of technology, investor enthusiasm was more restrained after new U.S. inflation figures came in stronger than anticipated.
Data released by the United States Department of Labor showed producer prices for final demand rose 1.4% in April, following an upwardly revised 0.7% increase in March.
Economists had forecast a monthly rise of 0.5%.
The report also revealed that annual producer inflation accelerated to 6.0% from 4.3%, surpassing expectations for a 4.9% reading.
Wall Street recovered from sharp early declines on Tuesday
U.S. equities regained momentum during Tuesday’s session after suffering steep losses earlier in the day.
The Nasdaq, heavily weighted toward technology companies, recovered after falling as much as 2%, although it still ended down 185.92 points, or 0.7%, at 26,088.20.
The S&P 500 fell 11.88 points, or 0.2%, to 7,400.96, while the Dow Jones Industrial Average rose 56.09 points, or 0.1%, to finish at 49,760.56.
Oil prices remain elevated amid Iran uncertainty
Rising crude prices contributed to Tuesday’s early market weakness, with U.S. oil futures surging more than 4% and climbing back above the $100-per-barrel threshold.
Energy markets continued reacting to uncertainty surrounding negotiations between Washington and Tehran aimed at ending the conflict and reopening the Strait of Hormuz.
Trump said Monday that the U.S.-Iran ceasefire was on “life support,” describing the truce as “unbelievably weak.”
Inflation concerns continue to weigh on investors
Investor sentiment was also pressured by consumer inflation data released earlier in the week, which showed the sharpest annual increase in consumer prices since May 2023.
Consumer inflation accelerated to 3.8% in April from 3.3% in March, largely due to rising energy costs.
Even so, equities recovered some ground later in Tuesday’s trading session as investors remained encouraged by strong corporate earnings results.
“Given that inflation is heading in the wrong direction and the labor market is holding up, it’s very unlikely that the Fed will be able to lower interest rates any time soon and it’s possible that we may start pricing in rate hikes for next year,” said Chris Zaccarelli of Northlight Asset Management.
He added, “We don’t believe the market needs rate cuts to keep climbing, but earnings will need to keep doing a lot of the heavy lifting as multiple expansion isn’t in the cards right now.”
Tech and airline stocks lagged in prior session
Semiconductor and computer hardware shares posted some of the biggest declines during Tuesday’s session, putting pressure on the Nasdaq.
The NYSE Arca Computer Hardware Index dropped 3.6%, while the Philadelphia Semiconductor Index slid 3%.
Airline stocks also weakened notably, with the NYSE Arca Airline Index falling 2%.
Networking, software and steel shares also moved lower, while oil service companies benefited from higher crude prices, pushing the Philadelphia Oil Service Index up 2.2%.
Meanwhile, healthcare, biotechnology and pharmaceutical stocks outperformed and helped cushion broader market declines.
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