US Stock Market Rises on Crude Oil Price Decline, Nvidia Earnings Expected

Market Sentiment Cautious Amid Rising Bond Yields and Geopolitical Tensions

The US stock futures indicated a mildly positive start on Wednesday, 20 May, after remaining under pressure for the past three straight sessions. This was largely due to rising bond yields and a lack of progress in negotiations between the US and Iran, which continued to keep market sentiment cautious.

Market Indicators

In the previous session, all three major indices ended lower amid a sharp retreat in technology stocks and a spike in bond yields. The 30-year Treasury yield climbed one basis point on Wednesday to 5.19%, marking its highest level in nearly 19 years. Meanwhile, the 10-year Treasury yield was little changed at 4.67% after touching a 16-month high of 4.7% in the previous session.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Higher bond yields have continued to cap Wall Street's rally as speculation intensified that the US Federal Reserve may opt for another rate hike before year-end rather than a rate cut. Energy prices have surged since the start of the Middle East conflict in late February, with WTI crude oil falling $3.13 a barrel on Wednesday to trade near $100.87.

Energy Prices

Technology stocks have so far supported Wall Street's rally, but rising bond yields are increasingly weighing on the sector, as valuations remain heavily dependent on expectations of strong future earnings growth. All eyes are on Nvidia, which is scheduled to report its first-quarter earnings after the market close.

Investors are treating Nvidia's earnings as a major macro event, with expectations that the results could determine whether the AI rally still has momentum left or whether the semiconductor boom is beginning to slow. Despite months of explosive gains across the broader AI trade, the brokerage highlighted that Nvidia itself has lagged behind several semiconductor peers this year.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Crude prices remain lower, with WTI crude oil extending losses for a second straight session as hopes of a possible US-Iran agreement eased some geopolitical risk premium. Brent crude also slipped another $3 to the day's low of $108 per barrel.