May 19 (Reuters) - U.S. stock index futures declined on Tuesday, dragged lower by a slide in chip stocks and ongoing inflation concerns despite a pause in the Treasury selloff and pullback in oil prices.
Nvidia (NVDA.O), lost 0.8% in premarket trading and was on track to drop for the third day in a row as investors retreated from richly valued semiconductor stocks that have helped drive U.S. equities to record highs this year.
Memory chip and data storage companies took a hit after surging in recent weeks. Micron Technology (MU.O), was down 1.7%, Seagate Technology (STX.O), fell 2.9%, while Western Digital (WDC.O), dropped 3%.
Wall Street's rally was halted on Friday as a rout in global bond markets evoked fears of major central banks adopting a tighter monetary policy with the Middle East conflict driving oil prices higher, raising the specter of elevated inflation.
Brent crude futures dipped about 1%, but were still above $110 after U.S. President Donald Trump said on social media on Monday that he had held off on a planned military strike against Iran, scheduled for Tuesday, while negotiations continued.
Meanwhile, the benchmark 10-year Treasury yield eased to 4.609% after touching its highest level since February 2025 on Monday.
"Risk sentiment is mixed on Tuesday, as investors weigh up the costs of the war in the Middle East," said Kathleen Brooks, research director at XTB.
"There is a sense of frustration that there has been no break in the impasse between the U.S. and Iran and no clear path to a deal to end the war."
At 07:23 a.m. ET, Dow E-minis lost 101 points, or 0.2%, S&P 500 E-minis fell 27.75 points, or 0.37%, and Nasdaq 100 E-minis were down 184 points, or 0.63%.
The tech-heavy Nasdaq (.IXIC), led losses on Wall Street on Monday, as rising yields pressured technology and other growth stocks. Higher yields tend to weigh on such companies because their valuations rely heavily on potential future profits.
On Tuesday, cloud firm Akamai Technologies (AKAM.O), fell 3.8% after announcing a $2.6 billion convertible bond offering.
Meanwhile, shares of software firms were among the top gainers, extending the recent momentum from the last few sessions.
Workday (WDAY.O), rose 3.3%, Atlassian (TEAM.O), gained 3.9%, Intuit (INTU.O), advanced 2.1%, while Zscaler (ZS.O), and ServiceNow (NOW.N), added 5.6% and 2.1%, respectively.
On Wednesday, investors will focus on the release of minutes from the U.S. Federal Reserve's latest policy meeting for clues on how much support there was among policymakers to pivot to a neutral stance from an easing bias.
Markets are pricing in about a 40% chance the central bank will raise interest rates by at least 25 basis points in January, according to CME's FedWatch tool.
Corporate earnings are another key test for markets. Nvidia, the world's most valuable company, is due to report results on Wednesday, with investors looking for evidence that AI-driven demand can justify elevated valuations across the semiconductor sector.
Walmart (WMT.O), the largest retailer globally, will also report earnings this week, and its results could offer a clearer view of how consumers in the United States are faring amid broad inflation pressures.
Reporting by Ragini Mathur and Utkarsh Hathi in Bengaluru; Editing by Pooja Desai
