U.S. index futures are pointing to a slightly higher open on Wednesday, suggesting a potential rebound after the markets came under pressure during Tuesday’s session.
Investor optimism around artificial intelligence continues to support equities, helping push stocks to record levels in recent weeks.
Early buying interest could be fueled by a rebound in Nvidia (NASDAQ:NVDA), which rose 0.4% in pre-market trading after dropping 2.8% on Tuesday. The AI-focused chipmaker remains a market favorite and a key driver of tech momentum.
Alibaba (NYSE:BABA) is also surging in pre-market trading, climbing 8.8% following CEO Eddie Wu’s announcement that the company plans to increase investment in AI models and infrastructure development. The Chinese tech giant also introduced new AI products and updates during Alibaba Cloud’s annual flagship conference.
Meanwhile, Micron (NASDAQ:MU) is seeing slight pre-market weakness, despite reporting better-than-expected fiscal fourth-quarter results and forecasting first-quarter revenue above estimates, driven by AI demand.
Trading may remain muted as investors await Friday’s closely watched consumer price inflation data.
On Tuesday, the major indices pulled back after trending higher in prior sessions. The tech-heavy Nasdaq fell 215.50 points, or 1.0%, to 22,573.47, while the S&P 500 dropped 36.83 points, or 0.6%, to 6,656.92. The Dow Jones Industrial Average slipped 88.76 points, or 0.2%, to 46,292.78.
The pullback partly reflected concerns about potential overvaluation following comments from Federal Reserve Chair Jerome Powell.
Speaking at an event in Rhode Island, Powell described equity prices as “fairly highly valued” after recent record highs.
He also addressed the monetary policy outlook, noting the Fed is in a “challenging situation” with near-term risks to inflation tilted upward and risks to employment tilted downward.
“Two-sided risks mean that there is no risk-free path,” Powell said. “If we ease too aggressively, we could leave the inflation job unfinished and need to reverse course later to fully restore 2 percent inflation.”
He added, “If we maintain restrictive policy too long, the labor market could soften unnecessarily. When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate.”
Nvidia’s pullback also weighed on the Nasdaq, coming after the company surged nearly 4% to a record closing high on Monday, following its strategic partnership with OpenAI to deploy at least 10 gigawatts of Nvidia systems for next-generation AI infrastructure.
Retail stocks showed notable weakness, with the Dow Jones U.S. Retail Index falling 1.2%, while software stocks also declined, reflected in a 1.2% drop in the Dow Jones U.S. Software Index.
Energy shares, however, continued to perform strongly, buoyed by a sharp rise in crude oil prices. The Philadelphia Oil Service Index jumped 3.5%, and the NYSE Arca Oil Index climbed 1.6%.
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