Aug 25 (Reuters) - Wall Street futures recovered on Tuesday, as technology stocks bounced back ahead of AI heavyweight Nvidia's results and an inflation report key to shaping interest rate expectations.
The gains could ease investor concerns sparked by a recent bond market rout that has pushed yields higher and pressured equities.
They could also help set the tone before September, a historically weaker month for stocks.
"I'd be careful not to conflate near-term concerns with long-term trends. I'll become more concerned if earnings begin to disappoint in a meaningful way," said Brian Levitt, chief global market strategist at Invesco.
Strong earnings potential and "AI-enhanced productivity" could be more powerful drivers for markets, he added.
Most megacaps were trading higher in premarket trading, with Nvidia (NVDA.O), up 1.33% and Meta (META.O), gaining 1.07%.
Memory chipmaker Micron (MU.O), added 2.75%, while data-storage companies Western Digital (WDC.O), and Sandisk (SNDK.O), rose 3.17% and 3.94%, respectively.
At 06:44 a.m. ET, Dow E-minis were up 212 points, or 0.4%, S&P 500 E-minis were up 31 points, or 0.4%, and Nasdaq 100 E-minis were up 246.75 points, or 0.85%.
The benchmark S&P 500 and the tech-heavy Nasdaq (.IXIC), closed lower on Monday after a selloff in semiconductor shares.
MUTED REACTION TO IRAN SANCTIONS
Markets largely shrugged off the latest U.S. economic threats against Iran. Treasury Secretary Scott Bessent said countries continuing to trade with Tehran could be forced out of the dollar-based finance system.
However, "Bessent framed the economic plan as a means to bring Iran to the negotiating table and for the U.S. to gain an upper hand, (rather) than an escalation," said Mohit Kumar, an economist at Jefferies.
"Our base case remains that Iran would want to exert more pressure on the U.S. in the short term, but eventually agree to a deal before the mid-terms when Trump would be willing to make most concessions."
Investors are bracing for a slew of catalysts this week, with Nvidia's quarterly report scheduled and the U.S. personal consumption expenditures data due on Wednesday.
The chip giant is expected to show that AI-driven demand remains robust. Any signs of slowing growth could reignite concerns over stretched valuations and how far the AI-fueled rally can extend.
Markets have grown increasingly wary of cyclical spending in the sector and the methods hyperscalers are using to fund their AI buildouts.
Meanwhile, the PCE report could provide greater clarity on price pressures in the economy after an in-line consumer inflation reading earlier this month tempered bets on an interest-rate hike by the U.S. Federal Reserve in September.
Still, money market participants are pricing in one 25-basis-point rate increase by the end of the year, according to LSEG data.
Against this backdrop, Fed Chair Kevin Warsh's Jackson Hole speech on Friday will be closely watched for clues on how the central bank will approach monetary policy.
Reporting by Purvi Agarwal and Niket Nishant in Bengaluru; Editing by Pooja Desai and Shinjini Ganguli
