Investing.com - U.S. stock futures edged higher on Wednesday after a softer-than-expected inflation reading eased fears that the Federal Reserve may soon raise interest rates.

Investors are also digesting another wave of strong bank earnings, while upbeat results from Dutch chip-equipment maker ASML reinforced confidence in the artificial intelligence boom. However, tensions in the Middle East remain elevated as the United States continued its military campaign against Iran.

1. Futures rise after inflation relief

U.S. stock futures moved higher early Wednesday after June inflation data came in softer than expected, easing concerns that the Federal Reserve could raise interest rates in the near term.

By 03:53 ET, S&P 500 futures were up 0.2%, while Nasdaq 100 futures climbed 0.6%. Dow Jones futures edged 0.1% lower.

Technology stocks looked set to lead the gains after another strong earnings report from a key AI company boosted confidence in the sector.

Markets also welcomed signs that inflationary pressures may be moderating, although investors remain cautious as geopolitical tensions in the Middle East continue to simmer.

Lower inflation is generally good news because it reduces pressure on the Fed to keep borrowing costs high. That tends to benefit growth stocks, particularly technology companies whose valuations are sensitive to interest-rate expectations.

2. Trump keeps pressure on Iran

Geopolitical risks remained in focus after President Donald Trump said U.S. military strikes against Iran would continue until Tehran agreed to a deal.

Speaking to Fox News, Trump said U.S. officials had spoken with Iranian representatives earlier in the day and claimed they wanted to negotiate. But he warned military operations would continue until he believed enough pressure had been applied.

"They better make a deal," Trump said, adding that Iran would otherwise "not have anything left."

The comments came after the U.S. military carried out a fourth consecutive day of strikes against Iranian targets. Trump also withdrew plans to impose a shipping protection fee on vessels transiting the Strait of Hormuz, easing one concern for global shipping companies.

The conflict remains an important risk. While investors have become somewhat accustomed to the headlines, any escalation that disrupts oil supplies could quickly reignite inflation concerns and weigh on stocks.

3. ASML reinforces the AI boom

ASML, the world’s largest supplier of semiconductor manufacturing equipment, raised its financial outlook after reporting stronger-than-expected quarterly results driven by robust artificial intelligence demand.

The Dutch company now expects 2026 revenue of between 43 billion and 45 billion euros, significantly above its previous forecast.

Second-quarter revenue rose to 9.33 billion euros, comfortably beating analyst expectations, while profit also topped forecasts.

ASML’s machines are essential for producing the world’s most advanced chips, making its results one of the clearest indicators of investment across the semiconductor industry.

For investors, the report suggests that spending on AI infrastructure remains exceptionally strong despite recent volatility in technology stocks. It also provides reassurance that chip manufacturers continue to invest heavily in expanding capacity.

4. IBM highlights AI’s winners and losers

IBM’s steep selloff continued to reverberate across the technology sector after the company acknowledged it had fallen behind as customers redirected spending toward artificial intelligence infrastructure.

Shares plunged 25% on Tuesday after IBM warned that increased investment in data centers and AI hardware had come at the expense of its higher-margin software business.

The warning also weighed on other software companies, highlighting how the AI investment cycle is reshaping technology spending.

Rather than increasing overall technology budgets, many businesses are reallocating spending toward servers, chips and networking equipment needed to power AI applications.

IBM’s results highlight an increasingly important trend. Artificial intelligence is creating clear winners and losers. Companies supplying AI infrastructure continue to benefit, while firms reliant on traditional enterprise software face growing pressure as customers rethink their technology budgets.

5. More earnings on deck

Investors are preparing for another busy day of corporate earnings after strong results from JPMorgan Chase, Bank of America, Citigroup and Wells Fargo helped launch the reporting season.

Wednesday’s focus turns to financial heavyweights including BNY, BlackRock and Morgan Stanley, while United Airlines is also scheduled to report results.

The reports will offer fresh insight into the health of the U.S. economy, financial markets and consumer demand.

Asset manager earnings could provide clues on investor activity and market sentiment, while airline results will be watched for signs of how consumers and businesses are responding to higher borrowing costs and geopolitical uncertainty.

Earnings season is now the market’s biggest catalyst. Strong corporate results could help support stocks after recent volatility, while disappointing guidance may test whether the market’s strong gains this year can be sustained.

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