U.S. equities are little changed to modestly lower Wednesday morning after the S&P 500 and Nasdaq closed at record highs Tuesday. At roughly 5:40 a.m. ET, Dow futures were down about 0.15%, S&P 500 futures were down 0.07% and Nasdaq 100 futures were down 0.34% as investors balance strong expectations for third-quarter earnings against another rise in Treasury yields and crude oil. Tuesday, the S&P 500 gained 0.58%, Nasdaq rose 0.45% and Dow advanced 0.49%, while the Russell 2000 fell about 0.6%.
Tuesday’s economic data underscored the strength of U.S. domestic demand. The August goods-and-services trade deficit widened 13.7% to $105.6 billion from $92.8 billion in July, as imports jumped to a record $420.8 billion. Capital-goods imports rose sharply, reinforcing evidence that AI infrastructure and broader business investment remain important sources of economic growth. The Atlanta Fed subsequently trimmed its third-quarter GDPNow estimate slightly to 3.7%, but the overall data remain consistent with an expansionary economy.
Treasury yields declined modestly Tuesday, with the 2-year down 2 basis points to 4.80%, the 10-year down 3 basis points to 5.29% and the 30-year down 1 basis point to 5.66%. That relief is fading this morning: the 10-year is back near 5.31%, while the 30-year briefly touched 5.70%, a fresh 24-year high. Rising term premiums, heavy Treasury issuance and persistent inflation concerns are increasingly driving the long end independently of near-term Fed expectations. Today’s $39 billion 10-year Treasury auction will therefore be an important market event, followed by a 30-year sale Thursday.
The dollar weakened Tuesday, with the DXY down 0.31 to 101.85. The euro rose 0.35% to $1.1262, sterling gained 0.42% to $1.3278, USD/JPY rose 0.16% to ¥158.17 and EUR/JPY increased 0.50% to ¥178.10. Those moves are reversing this morning: the DXY is back around 102.1, while the euro has slipped toward $1.121-$1.122 as investors await the Fed minutes and continue to assess European fiscal risk.
Commodity markets remain an important source of macro uncertainty. November WTI rose $0.49, or 0.55%, Tuesday to $89.92, while December gold gained $39.70, or 0.96%, to $4,196.50. Oil is firm again this morning, with Brent above $100 per barrel, as Houthi attacks on Saudi targets and a developing Gulf of Mexico storm offset improving Middle East exports. Saudi Arabia has increased flows through its East-West pipeline to roughly 5.8 million barrels per day, helping cap the upside, while the IEA is meeting today to discuss additional releases of crude and diesel inventories. Gold, by contrast, is lower toward the $4,135-$4,160 area as the dollar and Treasury yields rebound.
Today’s domestic calendar is relatively light before the afternoon but potentially important for rates. The September FOMC minutes are released at 2:00 p.m. ET, followed by August consumer credit at 3:00 p.m. The minutes should provide more detail on the internal debate behind September’s unanimous 25-basis-point rate increase. Since that meeting, softer inflation and employment data have pushed the probability of another October hike down to roughly 20%, although markets continue to price a meaningful chance of another increase by December.
The market will also hear from several Fed officials today, including Governor Christopher Waller, Minneapolis Fed President Neel Kashkari and St. Louis Fed President Alberto Musalem. With equities at records but the 30-year Treasury yield testing 5.7%, investors will be listening closely for any distinction between the Fed’s near-term policy-rate outlook and policymakers’ views on the rise in longer-term borrowing costs.
Sector Highlights
Tuesday’s gains were broad at the sector level, with 10 of 11 sectors higher. Utilities +3.01% led by a wide margin, followed by Consumer Discretionary +1.39%, Real Estate +1.13%, Consumer Staples +0.96%, Industrials +0.90% and Materials +0.65%. Relative laggards included Technology +0.55%, Energy +0.44%, Financials +0.18% and Communication Services +0.16%, while Health Care -0.16% was the only sector to decline. Breadth was positive but not especially strong given the index gains, at 1.53:1 on the NYSE and 1.01:1 on the Nasdaq, leaving the market’s underlying participation less impressive than the record-high S&P 500 and Nasdaq closes.
Information Technology
- Microsoft (MSFT) and Nvidia (NVDA) are in focus ahead of a San Francisco event today where CEOs Satya Nadella and Jensen Huang are expected to introduce Microsoft’s new Surface Laptop Ultra, powered by Nvidia RTX Spark chips. The product is designed to run increasingly sophisticated AI agents locally rather than exclusively through the cloud, potentially opening another major addressable market for Nvidia while allowing Microsoft to shift some AI workloads away from costly Azure infrastructure. The key question is price: memory shortages have sharply increased hardware costs, and Nvidia recently raised the price of its DGX Spark AI desktop by roughly 75%.
- Marvell Technology (MRVL) enters Wednesday after gaining 5.8% Tuesday following an increase in its 2028 revenue forecast tied to strong data-center chip demand. AMD rose 2.8% after CEO Lisa Su said the company plans to increase chip supply substantially in 2027 to meet AI demand. The moves reinforce the market’s continued willingness to reward companies with clear visibility into AI infrastructure spending despite elevated discount rates.
- Enterprise software is also regaining leadership. The S&P 500 software-and-services group reached a new 2026 high Tuesday as improved earnings expectations at companies including Salesforce (CRM), ServiceNow (NOW) and Accenture (ACN) reduce fears that generative AI will simply displace incumbent software vendors. Analysts are increasingly treating AI as an incremental demand catalyst for leading enterprise platforms rather than solely a disruption risk.
Utilities / Communication Services
- Constellation Energy (CEG) gained 12.3% Tuesday after announcing a massive power agreement with Alphabet (GOOGL). Google contracted for 3,590 MW of power, including a 20-year agreement that will support 890 MW of incremental nuclear capacity through upgrades at Constellation plants in Illinois, Pennsylvania and New Jersey. Constellation expects to invest more than $4.3 billion under the agreement. The transaction further establishes electricity supply—and nuclear generation specifically—as a direct extension of the AI infrastructure trade.
Consumer Staples
- Constellation Brands (STZ) is down roughly 4%-5% premarket despite reporting better-than-expected fiscal second-quarter results. Net sales rose 6% to $2.63 billion, while comparable EPS increased 3% to $3.74. Beer sales grew 5%, helped by Modelo Especial and Victoria, and the company reaffirmed comparable full-year EPS guidance of $11.20-$11.90 while raising its reported EPS range. The negative reaction suggests investors remain concerned about the durability of alcohol demand and consumer spending despite the headline beat.
Health Care
- McKesson (MCK) remains in focus after agreeing with Clayton, Dubilier & Rice to acquire Option Care Health (OPCH) in a transaction valued at roughly $5.8 billion including debt. McKesson will invest about $1.4 billion for a 49% interest, with the right to purchase the remaining stake later. The deal expands McKesson’s exposure to home infusion and alternate-site care, benefiting from the secular migration of complex treatments away from higher-cost hospital settings. Option Care shares surged nearly 33% Tuesday.
Industrials
- GE Aerospace (GE) and the broader commercial-aerospace aftermarket remain sensitive to the renewed rise in crude and jet-fuel prices. Sustained fuel costs above pre-war levels are encouraging airlines to reduce marginal capacity and defer some maintenance spending, potentially tempering what has been an exceptionally strong aftermarket cycle. The longer-term backdrop remains supported by large aircraft backlogs and aging fleets, but energy costs are becoming a more meaningful near-term earnings variable for the aerospace supply chain.
Consumer Discretionary
- Tapestry (TPR) remains a useful read on higher-income discretionary demand after Citi credit-card data showed U.S. luxury spending fell 6% year over year in September, the third consecutive monthly decline. Spending on leather goods improved modestly relative to other luxury categories, potentially benefiting Coach, but the broader data indicate that even affluent consumers are becoming somewhat more cautious amid high borrowing costs and election uncertainty.
