U.S. equity futures are subdued after two consecutive advances. At 5:18 a.m. ET, S&P 500 futures were down 0.01%, Dow futures were down 0.02% and Nasdaq 100 futures were down 0.21%. The Nasdaq is lagging as semiconductor shares weaken despite strong TSMC earnings. The Russell 2000 enters the session with improving short-term breadth but remains down 1.59% month to date, leaving small caps behind the large-cap indexes.
U.S. equities finished higher Wednesday as cooler producer inflation and strong earnings reduced concerns about an imminent Federal Reserve rate increase. The S&P 500 gained 0.38%, the Dow rose 0.29%, the Nasdaq advanced 0.62% and the Russell 2000 added approximately 0.4%. Month- and quarter-to-date performance now stands at Dow +0.65%, S&P 500 +0.97%, Nasdaq +0.21% and Russell 2000 -1.59%.
Market internals were constructive. Advancers led decliners by 1.52:1 on the NYSE and 1.29:1 on the Nasdaq. Total exchange volume reached 12.21B shares on the NYSE and 16.09B shares on the Nasdaq, excluding regional activity.
Treasury yields declined following the inflation release, with the 2-year yield down 5 basis points to 4.14%, the 10-year down 3 basis points to 4.55% and the 30-year down 1 basis point to 5.09%. The DXY fell 0.41 to 100.51, while the euro rose to $1.1466, sterling strengthened sharply to $1.3538 and the dollar was little changed at ¥162.21.
August WTI crude rose 1.30% to $80.37, keeping energy-related inflation risk in focus even as the Energy sector declined. August gold slipped 0.12% to $4,064.90, with lower yields offset by some reduction in immediate Fed-tightening concerns.
June producer prices fell 0.3% month over month, compared with increases of 0.6% in May and 1.1% in April. Final-demand inflation slowed to 5.5% year over year, while goods prices fell 1.4% and services prices increased 0.2%. The softer CPI and PPI reports have reduced the market-implied probability of a July Fed rate increase to roughly 10%.
The Federal Reserve’s Beige Book described economic activity as growing modestly, with employment largely stable and price growth remaining moderate. Thursday’s focus shifts to June retail sales and weekly jobless claims at 8:30 a.m. ET, followed by May business inventories at 10:00 a.m. The data will test whether inflation can ease without a material deterioration in consumer demand or employment.
Sector Highlights
Sector performance favored large-cap growth and consumer cyclicals. Communication Services led with a 2.78% gain, followed by Consumer Discretionary +1.36% and Financials +0.66%. Consumer Staples +0.10%, Real Estate +0.09% and Health Care was flat. The laggards were Utilities -0.98%, Energy -0.77%, Materials -0.41%, Industrials -0.18% and Technology -0.11%. Technology’s decline despite a higher Nasdaq reflected weakness in semiconductors offset by gains elsewhere in mega-cap growth.
Information Technology
- TSMC (TSM -3.2% premarket) fell despite reporting a record second-quarter profit that rose 77% year over year to approximately $22B, well above expectations. The reaction suggests investors were positioned for an exceptionally strong result and remain concerned about AI valuations and capital intensity.
- Western Digital (WDC -3.9%) and Seagate Technology (STX -3.3%) declined premarket as selling continued across memory and storage stocks.
Financials
- PayPal (PYPL +17.2%) surged Wednesday after Stripe and Advent International offered to acquire the company for $60.50 per share, roughly a 28% premium to its previous close.
- BlackRock (BLK +6.6%) advanced after beating quarterly profit expectations, while Bank of New York Mellon (BK +5.1%) also rallied on stronger-than-expected results.
Health Care
- UnitedHealth Group (UNH +5% premarket) raised its 2026 adjusted earnings forecast to $19.50–$20.00 per share after reporting lower-than-expected medical costs and a 29% increase in Optum operating income.
- Elevance Health (ELV -8.5%) fell Wednesday despite exceeding earnings and revenue expectations, reflecting continued investor sensitivity to medical-cost trends across managed care.
Industrials
- United Airlines (UAL -2.3% premarket) beat second-quarter expectations and raised its full-year forecast, but warned that higher fuel prices would weigh on third-quarter and annual profitability.
- Cintas (CTAS +4.4%) advanced Wednesday after reporting stronger-than-expected quarterly earnings.
Communication Services
- Netflix (NFLX) reports after the close. Analysts expect revenue to rise 13.6% to $12.59B, but investor attention will center on slowing engagement and an advertising business that remains smaller than initially expected.
Data sourced from FactSet Research Systems Inc.
Disclaimer: This article is for information purposes only and does not constitute investment advice.
