US stock futures edged lower on Wednesday, pausing near record highs as a fresh rise in oil prices cooled risk appetite before key economic data.
Brent crude climbed after renewed Middle East tensions raised concerns over supply disruption near the Strait of Hormuz and the inflationary fallout from higher energy costs.
Still, the pullback was limited, with investors continuing to take support from artificial intelligence hardware demand, upbeat earnings from technology suppliers and a busy IPO pipeline led by SpaceX.
Traders now face fresh data that could shape Federal Reserve expectations and test Wall Street’s record-setting rally this week ahead.
5 things to know before Wall Street opens
1. Futures ease after record close
US stock index futures slipped in early trading after all three major benchmarks closed at record highs on Tuesday.
S&P 500 and Nasdaq 100 futures were little changed, while Dow futures fell about 215 points, or 0.41%.
The pause came after the S&P 500 finished above 7,600 for the first time, underscoring the strength of the recent rally.
2. Oil rises as Gulf risks return
Brent crude rose 1.6% to $97.56 a barrel after renewed hostilities in the Middle East revived concern over energy supply risks.
The move followed an Iranian missile attack that damaged Kuwait’s airport and US military strikes near the Strait of Hormuz.
The Strait is a critical route for global oil flows, making any escalation in the area a direct concern for energy markets.
Higher oil prices can feed inflation expectations, particularly if traders begin to price in a prolonged disruption to supply.
That would complicate the outlook for the Federal Reserve at a time when investors are already watching whether the US economy remains too strong for policy easing.
3. AI hardware keeps supporting sentiment
Artificial intelligence remains one of the strongest supports for Wall Street’s rally.
Shares have been buoyed by fresh developments that point to sustained spending on AI hardware and infrastructure.
Broadcom rose 3% ahead of quarterly results due after the close.
The stock has gained 14% over the past four sessions, reflecting growing confidence that AI-related demand will continue to drive revenue for chip and networking suppliers.
4. SpaceX IPO plan puts deals back in focus
The IPO market is also drawing attention after a long stretch of muted large-cap listings.
Elon Musk’s SpaceX plans to fix its IPO price at $135 per share ahead of a roadshow to raise a record-setting $75 billion.
The planned listing is being watched as a test of investor appetite for high-profile private technology companies. It also comes as companies including Anthropic and OpenAI prepare to test public markets after years in which many late-stage startups delayed listings.
5. US data could shape the Fed outlook
Investors are now turning to economic data for clues on the next move in monetary policy.
Traders are watching S&P Global’s manufacturing and services surveys, along with the ISM services index, before Friday’s closely followed labour-market report.
The data could influence expectations for the Federal Reserve if it shows that growth and employment remain strong despite elevated borrowing costs.
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