S&P 500, Nasdaq, Dow Futures Ease After Another Record Close As AI Momentum Cushions Iran's Expanding Strikes: MRVL, AVGO, MSFT, PANW In Focus

• The CENTCOM has reportedly carried out “self-defense” strikes on Iran’s Qeshm Island following attacks on Kuwait and Bahrain.
• On Tuesday, all three U.S. benchmark indexes closed higher, with the S&P 500 closing above 7,600 for the first time. 
• Oil futures edged higher in the overnight session, heading into Wednesday over heightened tensions in the Middle East.

U.S. stock futures edged lower in the overnight session on Tuesday after markets closed at yet another record high, supported by the ongoing boom in artificial intelligence. Meanwhile, tensions in the Middle East continue as the U.S. reportedly struck Iran, even as U.S. President Donald Trump has claimed that conversations with Tehran are ongoing.

The Dow futures fell 0.08%, the S&P 500 futures declined 0.04%, and the Nasdaq 100 futures traded 0.10% lower as of 9.07 p.m ET.  

Among ETFs tracking benchmark indexes, the SPDR S&P 500 ETF (SPY), Invesco QQQ Trust (QQQ) and SPDR Dow Jones Industrial Average ETF Trust (DIA) all traded in the red at the time of writing, with retail sentiment in the ‘bullish’ territory for SPY, and in the ‘bearish’ territory for QQQ and DIA.

The iShares 20+ Year Treasury Bond ETF (TLT) was down 0.05% amid ‘neutral’ sentiment at the time of writing.

How Did US Markets Fare On Tuesday?

On Tuesday, all three U.S. benchmark indexes closed higher. The S&P 500 closed above 7,600 for the first time, while the Dow Jones index added more than 200 points to close 0.45% higher. The Nasdaq Composite was up 0.03% at close.

US Market Drivers

U.S. stock markets climbed on Tuesday as growing optimism in the AI sector offset ongoing tensions in the Middle East and uncertainty over the war between Washington and Tehran.

Chip companies and AI infrastructure players posted sharp gains, helping extend the momentum that has carried markets higher this year, with the S&P 500 ending in the green for the ninth straight week.

“The momentum has been incredibly strong. It’s for a lot of good reasons, and a lot of optimism, as well as really strong demand around the AI investment cycles. But still we are moving into a period, sort of moving past the earning season, which has been a tremendously positive catalyst for the markets,” Meghan Shue, head of investment strategy at Wilmington Trust, told CNBC in an interview.

Meanwhile, Trump said in a post on Truth Social that the U.S. and Iran deal negotiations are ongoing, dismissing reports of strained relations between the two countries. “The conversations between us have been going on continuously, including four days ago, three days ago, two days ago, one day ago, and today,” he said.

“Where they lead, one never knows, but as I told Iran, ‘It’s time, one way or another, for you to make a Deal. You’ve been doing this for 47 years, and it cannot be allowed to go on any longer!’” he added.

On the other hand, the United States military’s Central Command (CENTCOM) has reportedly carried out “self-defense” strikes on Iran’s Qeshm Island after reports of attacks on Kuwait and Bahrain. While Iran’s Islamic Revolutionary Guard Corps (IRGC) said that it had targeted American headquarters in Bahrain and a regional U.S. airbase, CENTCOM denied the claims, calling them false.

In a statement posted on X, CENTCOM said, “All Iranian attacks on American forces failed. US forces remain vigilant and ready to defend against unwarranted Iranian aggression.”

On Wednesday, investors will closely watch for the May ADP National Employment Report, along with fresh housing and manufacturing data. Markets will also look to the Federal Reserve’s Beige Book for insights into current economic conditions and regional business activity.

Trending Stocks To Watch

Marvell Technology Inc. (MRVL): The chip company’s shares surged more than 32% at close on Wednesday and continued to climb after-hours following Nvidia CEO Jensen Huang’s comments about it becoming the next trillion-dollar company.

Broadcom Inc. (AVGO): The Palo Alto, California-based company is gaining overnight ahead of its second-quarter (Q2) earnings results expected on Wednesday.

Microsoft Corp. (MSFT): Shares of the company closed down more than 4% on Tuesday, slipping further in the overnight session. Wedbush Securities analyst Dan Ives believes investors are failing to fully appreciate the company’s AI growth potential. The company also announced a partnership with Nvidia to use advanced AI agents across Windows devices and cloud infrastructure.  

Palo Alto Networks Inc. (PANW): Shares of the company edged down in after-hours trading following the company’s third-quarter (Q3) results. While Palo Alto beat revenue estimates, it reported a net loss for the quarter.

Global Market Trends

Oil futures edged higher in the overnight session, heading into Wednesday over increased tensions in the Middle East. Brent crude futures expiring in August were up nearly 1%, trading at around $96.89 a barrel at the time of writing, while WTI crude futures expiring in July were about 0.90% higher, trading around $94.60 a barrel.

Meanwhile, yields on the 10-year Treasury were at 4.459%, while gold prices fell to around $4,474.09 per ounce.

Asian markets edged higher on Wednesday, with the KOSPI, Nikkei 225 and the SSE Composite index climbing higher at the open.

South Korea’s KOSPI has more than doubled this year, but Wall Street believes the rally still has more room to run. Goldman Sachs reportedly raised its 12-month target for the KOSPI to 12,000 on Wednesday, implying an upside of more than 35% from current levels. Australian stocks were also trading up at the time of writing.

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