U.S. stock index futures pointed to a weaker start on Thursday, with markets poised to surrender some of the gains recorded in the previous trading session.
Investor sentiment has turned cautious again as crude oil prices move sharply higher and Treasury yields rebound.
U.S. crude futures have jumped more than 2%, climbing back above the US$100-per-barrel mark as traders continue to watch developments surrounding a potential peace agreement between the United States and Iran.
Treasury yields are also recovering after Wednesday’s steep decline, although the benchmark 10-year yield remains below the one-year highs reached earlier this week.
Nvidia Earnings Fail to Fully Reassure Investors
A muted response to earnings from NVIDIA (NASDAQ:NVDA) is also weighing on market sentiment, with the AI chipmaker slipping 0.7% in premarket trading.
The decline came despite Nvidia posting first-quarter results ahead of expectations, as investors continue to question how long the company can maintain its rapid pace of expansion.
“The chip giant is starting to sound like a broken record, playing the same message over and over again,” said Dan Coatsworth, head of markets at AJ Bell. “It effectively says AI demand is strong, lots of customers are queuing up for its chips, and there is still much more to go for.”
“The market’s attention is now focused on how long Nvidia can sustain this momentum,” he added. “Even the fastest or strongest athletes run out of steam at some point, and investors are starting to worry that Nvidia cannot keep up its current pace.”
Walmart Shares Slide After Weak Guidance
Disappointing guidance from Walmart (NYSE:WMT) also contributed to weaker sentiment, with the retailer falling 2.8% in premarket trading.
Wall Street Rallied Strongly on Wednesday
Stocks moved sharply higher on Wednesday, recovering after several weaker sessions, with all three major indexes posting solid gains.
The major averages finished close to session highs. The Nasdaq surged 399.65 points, or 1.5%, to 26,270.36, while the Dow Jones Industrial Average climbed 645.47 points, or 1.3%, to 50,009.35. The S&P 500 advanced 79.36 points, or 1.1%, to close at 7,432.97.
The rally was largely driven by a sharp pullback in Treasury yields and a steep decline in crude oil prices.
Treasury Yields and Oil Prices Retreat on Iran Hopes
The yield on the benchmark 10-year Treasury note dropped significantly from its highest level in more than a year as crude oil futures plunged over 5% amid renewed optimism surrounding a possible end to the U.S.-Iran conflict.
Oil prices fell below US$100 per barrel after President Donald Trump said the conflict with Iran was in the “final stages.”
At the same time, Trump continued to warn that military action remained possible, telling reporters, “We’ll either have a deal or we’re going to do some things that are a little bit nasty.”
Airline and Semiconductor Stocks Lead Wednesday Gains
Airline shares were among the strongest performers following the drop in oil prices, with the NYSE Arca Airline Index soaring 8.1%.
Semiconductor stocks also rallied sharply, driving the Philadelphia Semiconductor Index up 4.5%.
Housing stocks posted strong gains as well, resulting in a 3.8% rise in the Philadelphia Housing Sector Index.
Gold, banking and computer hardware shares also advanced notably, while oil producers moved sharply lower alongside falling crude prices.