U.S. equity futures hovered near the flatline early Wednesday as traders appeared content to pause following a two-day surge that propelled the major indexes to their highest levels in four months.
The Dow Jones, S&P 500, and Nasdaq 100 futures all showed minimal movement before the bell, suggesting a day of cautious consolidation rather than continued momentum.
This breather comes after a sharp rally earlier in the week that brought the S&P 500 and Nasdaq within striking distance of all-time highs. Tuesday’s rally, fueled in part by easing geopolitical tensions, added to Monday’s gains as investor sentiment turned upbeat.
Ceasefire in Focus as Markets Eye Stability
One of the main drivers behind the recent optimism was news of a ceasefire agreement between Israel and Iran, brokered by former President Donald Trump. Markets welcomed the potential for de-escalation in the region, even as skepticism remains over whether the truce will hold.
“On the assumption that everything works as it should, which it will, I would like to congratulate both countries, Israel and Iran, on having the stamina, courage, and intelligence to end what should be called ‘THE 12-DAY WAR,’” Trump wrote on Truth Social.
Despite accusations from both sides that the ceasefire was breached, traders seemed to focus more on the diplomatic breakthrough and the reduction in short-term risk.
Powell Holds Steady on Policy
In Washington, Federal Reserve Chair Jerome Powell addressed lawmakers for a second day, signaling the central bank remains in a wait-and-see mode. He pushed back on political pressure to cut interest rates, emphasizing data dependency amid mixed economic signals.
“For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” Powell said during his testimony before the House Financial Services Committee.
Powell’s tone reinforced expectations that no rate cuts are imminent, especially given still-elevated inflation and a resilient labor market.
Confidence Slips, But Risk Appetite Holds
Meanwhile, fresh economic data showed a dip in consumer confidence. The Conference Board’s index dropped to 93.0 in June from a revised 98.4 in May, well below expectations for a rise to 99.0. The pullback hints at growing unease among households, even as equity markets push higher.
Semiconductors, Airlines Lead the Charge
Tuesday’s rally was particularly strong in the tech and travel sectors. The Philadelphia Semiconductor Index surged 3.8%, marking its best close in five months, while airline stocks followed suit with the NYSE Arca Airline Index climbing 3.6%.
Gains were also seen in hardware, networking, and biotech shares, though gold and energy producers lagged as investors rotated into risk-on assets.