US pre-open: Futures inch higher, but traders cautious ahead of data

(Sharecast News) - US stock futures were pointing to small gains on each of Wall Street's main indices as investors showed caution ahead of important economic data releases with bond yields holding at eight-month highs. By 0531 in New York, Dow futures were up 0.15%, while the S&P 500 and Nasdaq were both showing gains of 0.08%.

Equity markets dropped sharply on Tuesday - the S&P 500 and Nasdaq declined 1.1% and 1.9% respectively - as bond yields hit their highest since April on the back of stronger-than-expected economic data and rising speculation that the proposed policies by president-elect Donald Trump will stoke inflation and ramp up the government deficit.

The yield on a 10-year US Treasury pushed higher in early deals on Wednesday, rising 1.5 basis points to 4.702%. Options activity is showing that the rate could hit 5% - last seen in October 2023 - as uncertainty builds before Trump's inauguration later this month.

The dollar continues to climb - the USD index was up 0.7% at a two-year high of 109.34 ahead of the opening bell - with more volatility expected ahead of this week's economic data barrage, culminating in Friday's non-farm payrolls report for December.

"[Wednesday's] release of the FOMC minutes, the ADP payroll data, and a keenly anticipated speech by Fed Governor Chris Waller, who can always influence the rate discourse, are poised to send ripples through the currency markets," said Stephen Innes, managing partner at SPI Asset Management.

"Investors are bracing for these events, ready to decode any signals on the Fed's next moves in this high-stakes monetary chess game."

In corporate news, Nvidia's share price is set to rebound slightly after a 6% drop the previous session as investors gave a cool reaction to chief executive Jensen Huang's keynote speech at CES, which included announcements about the next generation of AI-powered gaming chips using its Blackwell technology, as well as advancements in self-driving cars and robotics.

Others in the chip sector, like TSMC, ARM Holdings, Dell and Broadcom, were trading lower ahead of the opening bell.