US STOCKS-Wall St on track for muted open after sharp rally, focus on Nvidia earnings

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By Shashwat Chauhan and Kanchana Chakravarty

May 28 (Reuters) - Wall Street was set for a subdued open on Wednesday after a sharp rally in the previous session, when cooling trade tensions boosted sentiment, as investors awaited AI leader Nvidia's results and minutes from the U.S. central bank's last meeting.

Nvidia NVDA.O is expected to report a 66.2% surge in first-quarter revenue, according to data compiled by LSEG. Shares of the chipmaker rose 0.7% in premarket trading ahead of its earnings, due to be released after markets close.

"There's kind of wait and see for Nvidia earnings tonight, which have become one of the big macro market movers both because of the leverage to the AI trade and the AI theme and also because of the linkages to global trade," said Ross Mayfield, investment strategist at Baird.

Traders in the options markets are bracing for industry-wide volatility, with defensive options contracts drawing heavy attention for the VanEck Semiconductor ETF SMH.O, the largest semiconductor ETF.

At 08:17 a.m. ET, Dow E-minis YMcv1 were up 8 points, or 0.02%, S&P 500 E-minis EScv1 added 8.75 points, or 0.15%, and Nasdaq 100 E-minis NQcv1 rose 59.5 points, or 0.28%.

Most megacap and growth stocks pared gains after Tuesday's surge, with Nvidia up 0.7% and TSLA gaining 0.9%.

All three main Wall Street indexes soared in the last session, after U.S. President Donald Trump backed down over the weekend from his threat of 50% tariffs on the European Union.

The implementation of the tariffs is now delayed to July 9 to allow for negotiations between the White House and the EU.

U.S. equities are on track for robust monthly gains, with the S&P 500 .SPX as well as the Nasdaq .IXIC set for their best monthly showing since November 2023, as easing concerns around global trade, upbeat earnings and tame inflation data boosted risk appetite.

The S&P 500 is now about 4% off its record closing high reached on February 19, falling as much as 18.9% below that level in the wake of Trump's erratic tariff announcements that have whipsawed markets for much of his second term.

Minutes from the U.S. Federal Reserve's last policy meeting, when the central bank held borrowing costs steady, are slated for release at 2 p.m. ET.

In earnings, Michael Kors-owner Capri Holdings CPRI.N fell 4.6% after reporting a wider-than-expected quarterly loss.

New York Fed President John Williams said central banks must "respond relatively strongly" when inflation begins to deviate from their target, given the high uncertainty around the economic impact of U.S. tariffs and trade policy.

Yields on long-dated U.S. government bonds were slightly higher after scaling multi-month highs last week. Those on the benchmark 10-year note US10YT=RR were up marginally at 4.44%.

Global bond markets have been in the spotlight lately over concerns about fiscal sustainability in major economies including the United States and Japan.

Department-store chain Macy's M.N rose 3.7% after it reported a first-quarter results beat.

Cybersecurity firm Okta OKTA.O flagged risks related to the uncertain economic environment but stuck to its full-year outlook. Its shares dropped more than 12%.

(Reporting by Shashwat Chauhan and Kanchana Chakravarty in Bengaluru; Editing by Pooja Desai)

((Shashwat.Chauhan@thomsonreuters.com; Kanchana.Chakravarty@thomsonreuters.com))