U.S. stock futures traded higher on Wednesday, signaling a potential rebound for Wall Street after broad declines in the previous session.
Investor sentiment improved as Treasury yields eased from recent highs and crude oil prices moved sharply lower.
Treasury Yields and Oil Prices Decline
The benchmark 10-year Treasury yield retreated after climbing to its highest level in more than a year, while U.S. crude oil futures dropped over 3%.
Oil prices extended losses from Tuesday after President Donald Trump said the conflict involving Iran would end “very quickly.”
“We’re going to end that war very quickly,” Trump said during the annual congressional picnic at the White House on Tuesday. “They want to make a deal so badly.”
“It’s going to happen, and it’s going to happen fast. And you’re going to see oil prices plummet,” the president added.
Even with improving market sentiment, trading volumes could remain muted ahead of Nvidia’s (NASDAQ:NVDA) quarterly earnings report due after the market close.
Nvidia Results and Fed Minutes Awaited
As a key player in the artificial intelligence industry, Nvidia’s earnings and outlook are expected to influence broader market direction.
Market participants are also watching for the release of minutes from the Federal Reserve’s latest policy meeting later in the day.
The minutes from the Fed’s April meeting, where policymakers voted to keep interest rates unchanged after a notably divided debate, may provide additional insight into the future path of monetary policy.
U.S. Stocks Ended Lower on Tuesday
Major U.S. stock indexes finished Tuesday’s session in negative territory after an afternoon recovery attempt faded before the close.
The Nasdaq declined 220.02 points, or 0.8%, to 25,870.71. The S&P 500 lost 49.44 points, or 0.7%, ending at 7,353.61, while the Dow Jones Industrial Average fell 322.24 points, or 0.7%, to 49,363.88.
The selloff coincided with a continued surge in Treasury yields, with the 10-year note reaching its highest level since January 2025.
Inflation and Oil Concerns Continue to Weigh
Persistently elevated oil prices and inflation concerns have continued to pressure bond markets.
Although crude futures pulled back on Wednesday, prices remained above the $100-per-barrel mark amid ongoing geopolitical tensions in the Middle East.
While Trump said he halted a planned strike on Iran following requests from Gulf leaders, investors remain cautious about the possibility of renewed escalation.
The sustained rise in oil prices has increased speculation that the Federal Reserve may be forced to raise interest rates later this year to contain inflationary pressures.
According to CME Group’s FedWatch Tool, markets are currently pricing in a 41.9% chance that rates will end the year a quarter-point higher following the Fed’s final policy meeting.
“While the Nasdaq remains near highs and the broader AI trade is still intact, recent sessions have seen some profit-taking in semiconductors and mega-cap tech as yields rise and positioning looks increasingly stretched,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
She added, “The market is not abandoning the earnings and AI story but the combination of higher oil, higher yields and extremely strong positioning is making it harder for the sector to continue its near-vertical ascent without pauses or pullbacks.”
Pending Home Sales Exceed Forecasts
Economic data released Tuesday showed pending home sales in the U.S. rose more than expected in April.
The National Association of Realtors said its pending home sales index increased 1.4% to 74.8 in April after rising by an upwardly revised 1.7% in March.
Economists had forecast a 0.9% increase following the previously reported 1.5% gain in the prior month.
Gold and Airline Stocks Under Pressure
Gold mining shares fell sharply as gold prices weakened significantly. The NYSE Arca Gold Bugs Index dropped 3.7%, marking its lowest close in more than a month.
Airline stocks also posted steep losses, with the NYSE Arca Airline Index sliding 3.4%.
Housing, brokerage, and computer hardware shares also moved lower, while pharmaceutical, healthcare, and natural gas stocks outperformed the broader market.
