U.S. stock index futures were steady on Wednesday after a tech-driven selloff rocked Wall Street in the previous session as investors turned their attention to geopolitical tensions in the Middle East as well as domestic retailer earnings.
Target (TGT.N) shed 1.3% in premarket trading despite raising its annual sales forecast as its turnaround efforts bore fruit. Lowe's (LOW.N) said it now expects no growth in annual comparable sales as consumers remained cautious on discretionary spending.
Quarterly earnings from retailers will be scrutinized to gauge the health of the U.S. consumer amid the U.S.-Iran conflict that is seeping into inflation expectations.
Meanwhile, Moderna's (MRNA.O) shares surged more than 60% after interim results showed its vaccine combined with Merck's (MRK.N) Keytruda met both primary goals in a late-stage trial.
At 07:19 a.m. ET, Dow E-minis rose 53 points, or 0.09%, S&P 500 E-minis gained 4 points, or 0.05%, and Nasdaq 100 E-minis fell 39.5 points, or 0.13%.
On Tuesday, yields on global government bonds hit multi-decade highs as concerns over ballooning government debt and geopolitics battered the bond market, complicating policymaking.
The yield on the 30-year Treasury bond held steady at 5.279%, holding close to its highest level since 2007. The benchmark 10-year maturity backed off from its highest level since January 2025.
"A prolonged war means pressure on inflation via energy prices at a time when the Fed's policy outlook and its reaction function to inflation are no longer straightforward," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
"Something must give: either yields will come lower – if Middle East tensions ease, for example – or stock valuations will readjust."
Heavyweights including Nvidia (NVDA.O) clocked sharp losses, while semiconductor shares, which have had a tremendous run this year on hopes of insatiable AI demand, also whipsawed on Tuesday.
Most megacap and growth stocks were subdued on Wednesday, while chip stocks edged lower.
U.S. President Donald Trump said on Tuesday no talks were taking place with Iran and insisted the Strait of Hormuz was open, contradicting Iran's assertion that the strait remained shut to shipping.
Brent crude futures added 1.1% to hit their highest level in three weeks.
Minutes from the U.S. Federal Reserve's July meeting later in the day will be parsed for a clearer picture of the central bank's policy outlook.
"A more hawkish internal debate could keep the expected policy path elevated, but contained inflation and an earnings yield already close to the Treasury yield should limit how far long rates can rise without causing a broader repricing of risk assets," said Florian Ielpo, head of macro and multi-asset portfolio manager at Lombard Odier Investment Managers.
Traders currently see at least one 25-basis-point rate hike from the Fed by the end of 2026, according to data compiled by LSEG. The odds of a hike as soon as September, however, have decreased significantly following last week's tame inflation data.
Robust earnings from several sectors including some AI hyperscalers lifted the S&P 500 (.SPX) and the Dow (.DJI) to record highs earlier this month, but doubts lingered about whether hefty AI spending can yield tangible results soon.
In other stocks, Estee Lauder (EL.N) jumped 6.8% after the cosmetics maker forecast annual profit above Wall Street estimates.
