US Stock Futures Dip As S&P 500 Rally Stalls Near Highs — Analyst Urges Caution On Hot AI Stocks

Major U.S. index futures wobbled overnight after stocks rose sharply for a second straight session on Tuesday. Uncertainty over the ceasefire between Israel and Iran weighed down on sentiment even as the market is slowly and steadily progressing toward its all-time high.

U.S. President Donald Trump has not taken kindly to Iran and Israel engaging in missile strikes against each other since he announced the ceasefire. Both Middle East nations have claimed victory and warned each other against renewing hostilities. 

Media reports claimed that U.S. bombing did not obliterate Iranian nuclear sites but only set back the country’s program by a month. But Trump has refuted the reports. 

FedEx Corp.’s (FDX) weak guidance also hurt sentiment, dragging the stock down by nearly 6% in the after-hours session.

As of 11:32 p.m. ET on Tuesday, the Nasdaq 100, S&P 500, Dow and Russell 2000 futures were all little changed.

Stocks rallied for a second straight session on Tuesday as traders took in their stride the fragile ceasefire between Iran and Israel and Federal Reserve Chair Jerome Powell’s semiannual monetary policy testimony in which he said the central bank would prefer waiting to learn more about the economy’s trajectory. 

An unexpected drop in a key consumer confidence reading proved positive, as it raised rate cut odds, vindicating the stance of a couple of central bank officials, who have began calling for a July rate cut.

Technology and financial stocks drove the gains even as energy stocks fell for a second straight session.

The Invesco QQQ Trust (QQQ) ETF and the SPDR S&P 500 ETF (SPY) rallied 1.53% and 1.10%, respectively.
 

The SPDR Dow Jones Industrial Average ETF Trust (DIA) added 1.19%, while the iShares Russell 2000 ETF (IWM) jumped 1.34%.

According to Yahoo Finance, BMO Capital’s Brian Belski, one of the most bullish analysts on Wall Street, has upwardly adjusted the S&P 500 year-end price target to 6,700 after lowering it from the same level to 6,100 in the wake of Trump tariffs.

Wednesday’s economic calendar is light, with only the Commerce Department’s new home sales report due at 10 a.m. ET. Economists, on average, expect a decline in sales pace to a seasonally adjusted annual rate of 695,000 in May from 743,000 in the previous month.

Among those reporting earnings are General Mills (GIS), Paychex (PAYX), Winnebago (WGO), H.B. Fuller (FUL), Micron (MU), Steelcase (SCS) and Worthington Steel (WS).

Crude oil prices reversed course following two straight sessions of declines, gold futures rose modestly, and the dollar held its ground against most major currencies. After dipping below the 4.30% on Tuesday amid reduced rate cut expectations, the 10-year U.S. Treasury note yield moved back above the mark in overnight trading.

WisdomTree Senior Economist Jeremy Siegel recommended overweighting equities as a Fed funds rate sliding toward the 3% mark re-anchors the discount rate and sustains multiples. Specifically, he preferred artificial intelligence (AI) users over AI enablers trading at elevated multiples.

“Real margin expansion could very well accrue to users of AI—banks, industrial, consumer-staples, mid-cap firms that are learning where they can cut costs, increase output and improve margins,” he said.

The economist also recommended dividend-rich value stocks and defensives once the Fed finally pivots, while giving cyclical exporters room to perform if tariffs plateau or fade rather than escalate.

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