U.S. stock futures pointed to a stronger start on Wednesday, as investor sentiment turned optimistic following softer-than-expected inflation data and upbeat corporate earnings.
Futures climbed after the U.S. Labor Department reported that producer prices remained unchanged in June, offering relief on the inflation front. The latest data showed that the producer price index for final demand was flat for the month, following a 0.3% rise in May that was revised higher.
Market analysts had predicted a 0.2% monthly gain, slightly above the initially reported 0.1% increase for May. On an annual basis, the rate of producer price growth declined to 2.3% from a revised 2.7% in May, easing more than the expected slowdown to 2.5%.
The positive tone was also buoyed by earnings updates. Johnson & Johnson (NYSE:JNJ) shares rose 2.1% in pre-market trading after the company beat expectations for its second-quarter results and lifted its full-year outlook.
Bank of America (NYSE:BAC) also reported better-than-expected quarterly results, boosting sentiment in the financial sector. Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) posted strong earnings as well, adding to the wave of optimism.
Tuesday’s session had started on a high note, but gains faded throughout the day. The Nasdaq inched up 37.47 points, or 0.2%, to close at a record 20,677.80, while the S&P 500 dipped 24.80 points, or 0.4%, to 6,243.76. The Dow Jones Industrial Average dropped 436.36 points, or 1.0%, ending the day at 44,023.29.
Tech shares, particularly semiconductors, stood out. The Philadelphia Semiconductor Index gained 1.3%, closing at its highest level in a year. Nvidia (NASDAQ:NVDA) helped drive the sector’s strength, rallying 4.0% to a record closing price after sharing that it will “soon” resume H20 AI chip shipments to China.
“The U.S. government has assured NVIDIA that licenses will be granted, and NVIDIA hopes to start deliveries soon,” the company said in a statement.
Meanwhile, housing-related stocks tumbled, with the Philadelphia Housing Sector Index down 3.3%. Oil service firms also struggled due to falling crude prices, pulling the Philadelphia Oil Service Index 3.1% lower. Banking, biotech, and pharmaceutical sectors also saw selling pressure, dragging broader markets.
Earlier in the day, the Labor Department had also released encouraging data on consumer prices. The consumer price index rose 0.3% in June, matching forecasts and following a 0.1% gain in May.
Annual inflation increased to 2.7% from 2.4% the previous month, slightly above the 2.6% economists had expected. Core CPI, which excludes food and energy, edged up 0.2% in June, after a 0.1% rise in May. Economists had anticipated a 0.3% increase.
Despite the improving inflation backdrop, investor enthusiasm was tempered by continued trade tensions linked to President Donald Trump’s protectionist policies, which remain a lingering concern for the markets.
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