Dow Futures remain subdued as traders prepare for pivotal results from Nvidia and a renewed examination of the Federal Reserve’s favoured inflation metric. Reports of advancements in diplomatic initiatives aimed at ceasing hostilities in the Middle East and restoring access to the Strait of Hormuz lead to a decline in oil prices, as Canada responds in a deepening trade conflict with Washington.

Dow futures remained steady on Wednesday, as investors adopted a cautious stance ahead of the quarterly earnings report from prominent artificial intelligence company Nvidia and significant inflation data. By 02:59, the Dow futures contract had increased by 42 points, or 0.1%, while S&P 500 futures remained largely stable, and Nasdaq 100 futures experienced a decline of 25 points, or 0.1%. The primary U.S. averages experienced an uptick in the prior session, supported by a rise in AI-related stocks in anticipation of the Nvidia report. A decline in oil prices beneath $90 a barrel, coupled with a surge in U.S. government bonds, both fuelled by possible indications of diplomatic advancements in the Middle East, contributed positively to market sentiment. Nonetheless, disappointing returns from sports apparel retailer Dick’s Sporting Goods contributed to a decline in consumer discretionary stocks, offsetting broader gains on Wall Street. A fresh batch of economic data on consumer expectations and new home sales in July was released, revealing results that were softer than anticipated.

Markets are currently focusing on a significant event of the trading week: Nvidia’s fiscal second-quarter results, which will be announced after the closing bell. The semiconductor giant has emerged as a bellwether of the AI era, with investors consistently anticipating the firm to report blockbuster sales of its advanced chips that drive the burgeoning technology. According to LSEG data cited by Reuters, Nvidia’s quarterly revenue is projected to double from a year ago to an impressive $92.18 billion, primarily driven by robust data center sales. At that pace, revenue would experience its most rapid growth in seven quarters. Traders will likely be attentive to Nvidia’s projections regarding the degree to which its customers will transition from current-generation Blackwell chips to the new Vera Rubin processors. However, concerns have emerged regarding the sustainability of the AI infrastructure spending spree by Nvidia’s megacap clients, particularly after several of these companies indicated pressure on free cash flow in their recent earnings reports. Consequently, any insights Nvidia offers regarding these trends may significantly influence the AI discourse for an extended period.

Another headline-grabbing release is set to occur before the commencement of trading on Wednesday, as the Commerce Department will disclose its personal consumption expenditures price index for July. Month-on-month, the underlying “core” PCE price index is anticipated to show a slight acceleration to 0.2% in July, up from the previous 0.1%. In the twelve months leading up to July, the measure is expected to match June’s rate of 3.3%. The inflation metric, particularly the core gauge, is closely monitored by Federal Reserve policymakers as they assess the trajectory for U.S. interest rates. Concerns have emerged that an energy shock stemming from the conflict in the Middle East may lead to persistent price pressures, potentially prompting the Federal Reserve to increase interest rates. In theory, elevated borrowing costs can serve to mitigate inflation, though this comes with the potential drawback of exerting pressure on the overall economy. Markets have adjusted their expectations for a rate increase at the Fed’s September meeting, although Boston Fed President Susan Collins cautioned in an essay this week that without more sustained disinflation, tighter policy would soon be “appropriate.” Although Collins does not hold a voting position on the rate-setting Federal Open Market Committee, analysts at Deutsche Bank noted that their economists had “previously pegged her as someone not supporting a 2026 hike, so the comments go to show that a September hike may be very much live for some of the centrists on the FOMC.”

Looming over the inflation fears has been the spectre of a prolonged war between the U.S. and Iran that leaves the vital Strait of Hormuz waterway effectively shuttered for an extended period. Tanker traffic through the strait has diminished significantly, as shipping groups opt to avoid the potential risks associated with attacks on vessels navigating this route. Preliminary data indicates that only five commodity ships transited the strait on Tuesday, falling short of the 10-day moving average of 15. Before the onset of the conflict in late February, approximately 20% of global oil and liquefied natural gas transited through the channel. However, a senior Iranian official has indicated that Iran and Oman have reached an agreement on a new temporary route through the strait following diplomatic discussions in Tehran, as reported by Al Jazeera. However, the official emphasised that the strait will not fully reopen until the United States adheres to its commitments outlined in the framework ceasefire agreement established in June. Meanwhile, Russia’s RIA Novosti outlet reported that the U.S. and Iran had reached a new ceasefire agreement, which is expected to be announced in the coming days. Investing.com was unable to promptly authenticate the report, which referenced sources from Iran and Pakistan. Brent crude futures, the global oil benchmark, have slumped. Yet with the prospect of a return to fighting always “just around the corner,” Brent will likely never fall back to where it stood prior to the conflict, analysts said. “[A] geopolitical risk factor will be permanently embedded in the price,” they said.

Canada has announced its intention to impose tariffs of up to 50% on approximately 700 American products in response to new U.S. levies, as stated by Canadian officials on Tuesday. Ottawa’s tariffs, affecting approximately $20 billion in U.S. imports each year, were implemented following Canada’s announcement of “dollar-for-dollar” duties to correspond with 50% U.S. tariffs on a broad spectrum of Canadian exports. The counter-tariffs are set to take effect on September 8, as indicated by a government statement. The U.S. tariffs were implemented on Saturday, subsequent to the unsuccessful negotiations between American and Canadian representatives. Both sides have engaged in a series of verbal exchanges following the breakdown of negotiations, heightening tensions between the two historically allied neighbours.