U.S. stock futures pointed to a mixed open on Wednesday, with investors balancing renewed strength in technology shares against fresh inflation data that reinforced concerns about interest rates and rising costs.
Futures tied to the Nasdaq moved higher ahead of the open, supported by gains in semiconductor stocks, while broader market sentiment outside the technology sector remained more cautious.
Nvidia boosts semiconductor sector ahead of open
Technology shares looked set to lead early gains, with Nvidia (NASDAQ:NVDA) rising 1.6% in premarket trading.
The advance followed news that Nvidia chief executive Jensen Huang would join U.S. President Donald Trump on his trip to China for meetings with Chinese President Xi Jinping.
Huang was reportedly added to the delegation at the last minute, helping lift sentiment across the semiconductor sector before the opening bell.
Producer prices rise more than expected
Investor appetite outside of technology stocks remained restrained after the release of stronger-than-expected U.S. producer inflation figures.
According to the United States Department of Labor, the producer price index for final demand increased 1.4% in April after an upwardly revised 0.7% rise in March.
Economists had expected a monthly increase of 0.5%.
The report also showed annual producer inflation accelerated to 6.0% in April from 4.3% the previous month, exceeding forecasts for a 4.9% increase.
Stocks recovered after early losses on Tuesday
Wall Street shares staged a recovery during Tuesday’s session after heavy losses earlier in the day.
The tech-heavy Nasdaq rebounded from a decline of as much as 2% but still finished down 185.92 points, or 0.7%, at 26,088.20.
The S&P 500 slipped 11.88 points, or 0.2%, to 7,400.96, while the Dow Jones Industrial Average edged up 56.09 points, or 0.1%, to close at 49,760.56.
Oil prices continue climbing amid Iran tensions
A sharp rise in oil prices contributed to the early sell-off on Tuesday, with U.S. crude futures climbing more than 4% and moving back above $100 per barrel.
Oil markets continued to react to uncertainty surrounding negotiations between the United States and Iran over ending the conflict and reopening the Strait of Hormuz.
Trump said on Monday that the U.S.-Iran ceasefire was on “life support,” describing the truce as “unbelievably weak.”
Inflation worries continue to pressure sentiment
Market sentiment was also weighed down by separate consumer inflation data released earlier in the week, which showed the fastest annual increase in consumer prices since May 2023.
Consumer inflation accelerated to 3.8% in April from 3.3% in March, driven largely by higher energy costs.
Despite the inflation concerns, equities recovered part of their losses later in Tuesday’s session as investors continued to focus on strong corporate earnings.
“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, chief investment officer at 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.”
Technology and airline shares lagged in previous session
Computer hardware and semiconductor stocks posted some of the steepest losses on Tuesday, weighing heavily on the Nasdaq.
The NYSE Arca Computer Hardware Index dropped 3.6%, while the Philadelphia Semiconductor Index fell 3%.
Airline shares also weakened significantly, with the NYSE Arca Airline Index declining 2%.
Networking, software and steel stocks also traded lower, while oil service companies benefited from rising crude prices, lifting the Philadelphia Oil Service Index by 2.2%.
Healthcare, biotechnology and pharmaceutical shares outperformed, helping reduce broader market losses.