US stock futures subdued as Middle East tensions cool; Powell in focus

(Reuters) -U.S. stock futures were subdued on Wednesday, after the Nasdaq 100 closed at a record high a day earlier on Israel and Iran signaling their air war had ended, and as investors awaited more comments from Federal Reserve Chair Jerome Powell.

All three major indexes gained more than 1% on Tuesday and the benchmark S&P 500 index was less than 1% below its all-time peak, as the de-escalation in Middle East hostilities supported risk sentiment.

“Turning back to yesterday’s market moves, the key reason the market rallied so much was because lower oil prices (and hence lower inflation) are keeping the prospect of rate cuts in play this year,” Jim Reid, global head of macro and thematic research at Deutsche Bank, said in a note.

In the second day of Powell’s congressional testimony, scheduled at 10:00 a.m. ET, investors will look out for any hints on the central bank’s monetary policy path.

This comes a day after Powell emphasized the Fed’s wait-and-watch approach to interest rates as tariff-led price pressures kick in. However, he also said a lower-than-expected inflation reading or weakness in the labor market would push the central bank to cut sooner.

Money market moves show traders are pricing in about 60 basis points of rate cuts by the end of 2025, with a 71% chance of a 25-bps rate cut in September, according to CME Group’s FedWatch tool.

At 05:32 a.m. ET, Dow E-minis were down 13 points, or 0.03%, S&P 500 E-minis were up 1 points, or 0.02%. Nasdaq 100 E-minis were up 19.75 points, or 0.09%.

Shares of delivery giant FedEx fell 5.5% in premarket trade after the company forecast quarterly profit below estimates as tariff weighed on global demand.

Investors will also focus on the Commerce Department’s final take on first-quarter GDP due on Thursday, and Friday’s Personal Consumption Expenditures (PCE) report that will help ascertain the economic effects of President Donald Trump’s tariffs that have kept global markets on edge since the start of the year.

Micron Technology shares edged up 0.6% ahead of the chipmaker’s quarterly results due after the closing bell.

U.S.-listed shares of cybersecurity firm Blackberry jumped after the company raised its annual revenue forecast citing steady demand amid growing online crimes.

(Reporting by Kanchana Chakravarty in Bengaluru; Editing by Devika Syamnath)