U.S. stock futures trended higher on Wednesday morning as investors awaited third-quarter earnings from Meta Platforms and Tesla. S&P 500 futures rose 0.24%, while Nasdaq 100 futures led the advance with a 0.62% gain.

Polymarket prediction markets assigned a 68% probability to a higher open for the S&P 500. This bullish sentiment persisted despite rising energy costs and geopolitical tensions in the Middle East.

Market drivers and geopolitical risks

Equity benchmarks showed mixed performance in pre-market trading, with small caps lagging behind large-cap tech names. The primary drivers for the session included:

• Tech strength: Nasdaq 100 futures gained 0.62%, outpacing the S&P 500's 0.24% rise and the Dow Jones Industrial Average futures' marginal 0.04% increase.
• Small-cap weakness: Russell 2000 futures slipped 0.16%, indicating a rotation toward larger, more established technology firms.
• Energy volatility: Brent crude climbed 1.45% to $110.37 per barrel, while WTI crude jumped 1.48% to $99.27. The surge followed stalled diplomatic efforts in the Middle East, where Iran refused talks with Washington until seven demands were met.

Earnings calendar and AI demand signals

Wednesday features a dense earnings docket, headlined by two Magnificent 7 constituents reporting after the closing bell. The schedule also includes major semiconductor and enterprise technology firms.

Technology strategist Luke Lango noted that buyers are aggressively purchasing dips in AI-related stocks. He cited rebounding shares in CoreWeave and Nebius Group as evidence that selling pressure is easing ahead of key catalysts. Lango pointed to accelerating underlying demand, including new compute negotiations between Anthropic and Nscale, and SpaceX targeting over 10 gigawatts of AI capacity by the end of 2027.

What the numbers show

The divergence between index futures reveals a concentrated market leadership. While the broad S&P 500 posted a modest 0.24% gain, the tech-heavy Nasdaq 100 rose nearly three times faster at 0.62%. Conversely, the Russell 2000 fell 0.16%. This spread suggests that risk appetite is currently isolated to mega-cap technology stocks, likely driven by anticipation of Meta and Tesla results, rather than a broad-based economic recovery. Small-cap underperformance alongside rising oil prices further indicates that higher input costs may be weighing on smaller, less resilient businesses.

Previous session recap

The Polymarket contract for October 20 resolved "Up," recording $64,129 in total trading volume. In Tuesday's regular session, major ETFs tracking these indices closed mixed:

• SPDR S&P 500 ETF Trust (SPY): Rose 0.34% to $769.05.
• Invesco QQQ Trust (QQQ): Declined 0.10% to $717.63.
• State Street SPDR Dow Jones Industrial Average ETF Trust (DIA): Ended 1.05% higher at $524.36.