Lower Treasury Yields and Oil Prices May Support Wall Street Rebound: Dow Jones, S&P, Nasdaq

U.S. stock index futures pointed to a stronger open on Wednesday, suggesting Wall Street could recover some of the losses recorded in the previous trading session.

Investor sentiment appeared to improve as Treasury yields retreated from recent highs and crude oil prices moved sharply lower.

Treasury Yields and Oil Prices Ease

The yield on the benchmark 10-year Treasury note pulled back after reaching its highest level in more than a year, while U.S. crude oil futures dropped more than 3%.

Oil prices extended Tuesday’s decline after President Donald Trump said the conflict involving Iran would end “very quickly.”

“We’re going to end that war very quickly,” Trump told lawmakers gathered at the White House for the annual congressional picnic on Tuesday. “They want to make a deal so badly.”

“It’s going to happen, and it’s going to happen fast. And you’re going to see oil prices plummet,” the president added.

Despite the improvement in sentiment, trading activity could remain relatively cautious ahead of Nvidia’s (NASDAQ:NVDA) earnings release after the closing bell.

Nvidia Earnings and Fed Minutes in Focus

As one of the leading companies tied to the artificial intelligence sector, Nvidia’s quarterly results and forward guidance are expected to play a major role in shaping broader market sentiment.

Investors are also waiting for the release of minutes from the Federal Reserve’s latest monetary policy meeting later in the day.

The minutes from the Fed’s April meeting, where policymakers voted to keep interest rates unchanged following an unusually divided discussion, may provide additional clues about the future direction of interest rates.

Stocks Fell Sharply in Previous Session

The major U.S. indexes closed lower on Tuesday after a brief recovery attempt during afternoon trading lost momentum late in the session.

The Nasdaq dropped 220.02 points, or 0.8%, to finish at 25,870.71. The S&P 500 declined 49.44 points, or 0.7%, to 7,353.61, while the Dow Jones Industrial Average lost 322.24 points, or 0.7%, ending at 49,363.88.

The decline came as Treasury yields continued climbing, with the 10-year yield reaching its highest level since January 2025.

Inflation Concerns Continue to Pressure Markets

Persistently high oil prices and fears of renewed inflationary pressure have contributed to the recent increase in bond yields.

Although crude futures pulled back somewhat on Wednesday, prices remained above $100 per barrel amid ongoing tensions in the Middle East.

While Trump claimed he halted a planned attack on Iran at the request of Gulf leaders, investors remain concerned that the conflict could escalate again.

The elevated cost of oil has fueled speculation that the Federal Reserve may need to raise interest rates later this year to contain inflation.

According to CME Group’s FedWatch Tool, markets are currently pricing in a 41.9% probability that interest rates will be a quarter-point higher after the Fed’s final meeting of the year.

“While the Nasdaq remains near highs and the broader AI trade is still intact, recent sessions have seen some profit-taking in semiconductors and mega-cap tech as yields rise and positioning looks increasingly stretched,” said Daniela Hathorn, Senior Market Analyst at Capital.com.

She added, “The market is not abandoning the earnings and AI story but the combination of higher oil, higher yields and extremely strong positioning is making it harder for the sector to continue its near-vertical ascent without pauses or pullbacks.”

Pending Home Sales Beat Expectations

Economic data released Tuesday showed stronger-than-expected growth in pending U.S. home sales during April.

The National Association of Realtors said its pending home sales index rose 1.4% to 74.8 after increasing by an upwardly revised 1.7% in March.

Economists had expected a 0.9% increase following the previously reported 1.5% gain in the prior month.

Gold and Airline Stocks Lead Declines

Gold-related shares came under heavy pressure as bullion prices dropped sharply. The NYSE Arca Gold Bugs Index fell 3.7%, reaching its lowest closing level in more than a month.

Airline stocks also weakened significantly, with the NYSE Arca Airline Index tumbling 3.4%.

Housing, brokerage, and computer hardware stocks also posted notable declines, while pharmaceutical, healthcare, and natural gas shares outperformed the broader market.

Nvidia stock price