US equities closed mixed on Wednesday as renewed weakness in technology shares offset improving sentiment from sharply lower oil prices, leaving investors to balance corporate earnings optimism against lingering concerns over inflation and interest rates.

The session began on a positive footing, but selling pressure quickly returned to the technology sector. The Nasdaq Composite declined 0.4%, while the S&P 500 slipped 0.1%, extending its losing streak to three consecutive sessions. The Dow Jones Industrial Average outperformed, rising 0.4% as investors rotated into industrial and defensive sectors.

Technology remained under pressure following Tuesday's broad sell-off across semiconductor and memory stocks. Investors continued to question whether the sector's rapid gains, fuelled by artificial intelligence optimism, had outpaced current earnings fundamentals amid expectations that US interest rates could remain elevated for longer.

Memory chip manufacturers remained among the weakest performers during regular trading. Micron Technology edged lower ahead of its quarterly earnings release after losing 13% in the previous session. SanDisk fell around 2%, while Western Digital declined approximately 4%.

However, sentiment shifted significantly after the closing bell. Micron reported quarterly earnings that comfortably exceeded Wall Street expectations, driven by robust demand for AI-related memory products and improving pricing conditions. The company projected continued strength in demand while highlighting expanding profit margins supported by constrained industry supply. The results sent Micron shares more than 13% higher in after-hours trading and improved expectations for the broader semiconductor sector.

Elsewhere in technology, Microsoft and Tesla each lost around 2%, while Nvidia slipped 0.5%. Newly listed SpaceX also eased roughly 1% after only modest gains in the previous session.

AI infrastructure specialist Cerebras experienced one of the session's sharpest declines, falling nearly 20% after releasing its first earnings report as a public company. Although revenue exceeded expectations, management warned that profit margins would come under pressure in the coming quarter as investment costs increased, prompting investors to reassess growth expectations across the AI hardware space.

Markets also digested index rebalancing announcements from S&P Dow Jones Indices. Alphabet will replace Verizon in the Dow Jones Industrial Average, while Honeywell Aerospace will join the S&P 500, replacing Conagra Brands. The changes are scheduled to take effect on Monday.

Outside equities, energy markets remained under heavy pressure. West Texas Intermediate crude fell nearly 5% to around $69.80 per barrel, while Brent crude declined to approximately $73 as concerns over Middle East supply disruptions continued to ease amid renewed hopes for de-escalation around the Strait of Hormuz.

Lower oil prices helped improve the inflation outlook, pushing the benchmark 10-year US Treasury yield down to 4.41% from 4.50% in the previous session. However, the two-year Treasury yield remained elevated at approximately 4.16%, signalling that investors continue to expect the Federal Reserve to maintain a restrictive monetary policy.

Risk assets were mixed across other markets. Bitcoin retreated toward $61,000 after briefly trading below $60,000 during the session. Gold futures fell more than 3% to around $4,010 per ounce, reaching their lowest level since November as higher real yields and a stronger US dollar reduced demand for safe-haven assets. The US Dollar Index gained 0.2% to 101.60.

Investor attention now turns to the upcoming US Personal Consumption Expenditures (PCE) inflation report, the Federal Reserve's preferred measure of inflation. The release is expected to provide important guidance on whether policymakers are likely to maintain current interest rates or consider additional tightening should inflationary pressures prove more persistent than expected.

Market Outlook

Global markets are likely to open with a cautious but constructive tone as investors digest Micron's stronger-than-expected earnings, which could help stabilise sentiment across semiconductor and AI-related stocks after several sessions of heavy selling. A broader recovery in chipmakers would provide welcome support for both the Nasdaq and the S&P 500.

The primary catalyst, however, remains the US PCE inflation report. A softer-than-expected reading would strengthen expectations that inflation continues to moderate, potentially easing pressure on Treasury yields and supporting equities, particularly growth and technology shares. Conversely, a stronger inflation print could reinforce expectations that US interest rates will remain higher for longer, placing renewed pressure on risk assets while supporting the US dollar.

Oil prices are expected to remain sensitive to geopolitical developments, although easing supply concerns may continue to cap gains unless tensions in the Middle East escalate again. Gold is likely to remain under pressure while the dollar and bond yields stay elevated, although any decline in Treasury yields following softer inflation data could trigger a short-term rebound in precious metals.