U.S. stock futures traded modestly higher on Wednesday after inflation data came in below expectations, easing concerns that the Federal Reserve may need to raise interest rates in the near term. Investors also continued to assess a fresh round of corporate earnings, while strong results from ASML (EU:ASML) reinforced optimism surrounding artificial intelligence investment. At the same time, geopolitical tensions remained elevated as military action between the United States and Iran continued.
Softer inflation supports futures
Early trading pointed to a positive start on Wall Street. S&P 500 futures rose 0.2 percent, Nasdaq 100 futures gained 0.6 percent and Dow Jones futures edged 0.1 percent lower.
The latest inflation figures suggested price pressures are continuing to ease, reducing expectations of further near-term interest rate increases. Lower inflation is generally supportive for growth stocks, particularly technology companies, whose valuations tend to benefit from lower borrowing costs.
Despite the encouraging inflation data, investors remained cautious because of ongoing geopolitical uncertainty.
Middle East tensions remain in focus
President Donald Trump said military operations against Iran would continue until Tehran agreed to return to negotiations.
Speaking to Fox News, Trump said discussions had taken place with Iranian representatives but warned that military pressure would continue.
“They better make a deal,” he said, adding that otherwise Iran would, “not have anything left.”
The comments followed a fourth consecutive day of United States military strikes against Iranian targets. Trump also confirmed he had abandoned plans to introduce a shipping protection fee for vessels passing through the Strait of Hormuz, easing some concerns for global shipping companies.
Although markets have become more accustomed to geopolitical headlines, investors continue to monitor developments closely because any disruption to global oil supplies could increase inflationary pressures.
ASML strengthens confidence in AI investment
ASML (EU:ASML), the world’s largest supplier of semiconductor manufacturing equipment, raised its financial outlook after reporting stronger-than-expected quarterly results.
The company now expects 2026 revenue of between 43 billion euros and 45 billion euros, significantly above its previous guidance. Second-quarter revenue reached 9.33 billion euros, comfortably exceeding market expectations.
ASML’s equipment is essential for manufacturing the world’s most advanced semiconductor chips, making its results an important indicator of investment across the artificial intelligence supply chain.
The latest update suggests demand for AI infrastructure remains strong despite recent volatility in technology shares.
IBM highlights changing technology spending
The market also continued to react to IBM’s (NYSE:IBM) disappointing results after the company acknowledged that customer spending has increasingly shifted towards artificial intelligence infrastructure.
IBM shares fell 25 percent after management said investment in AI servers and data centres had come at the expense of demand for its traditional software business.
The results reinforced a growing divide within the technology sector, where companies supplying AI infrastructure continue to benefit, while businesses focused on conventional enterprise software face increasing competitive pressure.
Earnings season gathers pace
Investors are preparing for another busy day of corporate earnings following stronger-than-expected reports from JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC).
Attention now turns to results from BNY (NYSE:BNY), BlackRock (NYSE:BLK), Morgan Stanley (NYSE:MS) and United Airlines (NASDAQ:UAL).
These updates are expected to provide further insight into the strength of the United States economy, investor activity, consumer demand and the outlook for financial markets.