Investing.com - U.S. stock futures dropped on Wednesday, after an uptick in Treasury yields weighed on stocks in the previous session. Markets are looking ahead to fresh retail earnings, with investors keen for any insight into the impact of President Donald Trump’s punishing tariffs on prices. Nvidia (NASDAQ:NVDA) CEO Jensen Huang comments on U.S. curbs on artificial intelligence chip exports to China, while inflation in the U.K. surges.

1. Futures dip

U.S. stock futures edged lower on Wednesday, pointing to an extension to a drop in equities in the prior session.

By 03:18 ET (07:18 GMT), the Dow futures contract had slipped by 172 points, or 0.4%, S&P 500 futures dropped by 29 points, or 0.5%, and Nasdaq 100 futures fell by 125 points, or 0.6%.

The main averages on Wall Street retreated on Tuesday, as stocks were weighed down by elevated U.S. Treasury yields. President Donald Trump went to Capitol Hill to persuade Republican lawmakers to pass his massive budget bill, which some analysts have estimated could add between $3 trillion to $5 trillion to the U.S. government’s $36.2 trillion debt load.

At the end of the trading day, the benchmark S&P 500 had declined by 0.39%, snapping six-session winning streak.

Home Depot (NYSE:HD) shares pared back earlier gains to finish lower, while Tesla (NASDAQ:TSLA)’s stock inched up by 0.5% after CEO Elon Musk said he plans to be at the helm of the electric carmaker in five years.

2. Retail earnings ahead

Investors will have the chance to parse through earnings from more retail chains on Wednesday, with the impact of Trump’s aggressive tariff agenda in focus.

Department store group TJX Companies (NYSE:TJX) and home improvement firm Lowe’s Companies (NYSE:LOW) are both due to deliver their results before the start of U.S. trading.

The figures come against a backdrop of increased tariff tensions that have contributed to gloomy returns and forecasts from a host of consumer-facing companies. This includes big-box retail titan Walmart (NYSE:WMT), which warned last week of impending price hikes.

On Tuesday, Home Depot said it would keep prices steady, although it flagged that the duties may cause some products to disappear from the do-it-yourself retailer’s shelves.

3. Nvidia CEO on U.S. AI chip export controls

Nvidia CEO Jensen Huang said on Wednesday that U.S. export restrictions on artificial intelligence chips to China had failed to prevent Beijing’s advancements in the industry, pushing businesses towards locally-developed processors.

“I think, all in all, the export control was a failure,” Huang told reporters at Taiwan’s Computex conference. “The export control gave [local companies] the spirit, the energy, and the government support to accelerate their development.”

Huang also noted that Nvidia’s market share in China has slumped to 50%, down from 95% at the start of former U.S. President Joe Biden’s administration. Biden oversaw a slew of restrictions on the export of crucial AI tech to China that Trump has largely maintained or even deepened.

The U.S. Department of Commerce recently issued new guidance aimed at further restricting China’s chip industry, with the agency stating that use of certain chips from Huawei violated U.S. export laws.

4. U.K. inflation surges

U.K. inflation jumped sharply in April, hitting its highest level in over a year, potentially causing the Bank of England to delay any further interest rate cuts.

Annual consumer price inflation rose 3.5% in March, above the 2.6% seen the prior month, and considerably above the U.K. central bank’s 2.0% medium-term target. The monthly rate rose 1.2%, a steep uptick from the 0.3% seen in March.

Analysts had expected the CPI to rise 3.3% on an annual basis, and 1.1% on the month.

Core CPI, which excludes volatile energy and food prices, rose 1.4% on a monthly basis, with the annual rate at 3.8%.

This acceleration in inflation came as the country faced a confluence of factors that are likely to drive up prices, including substantial hikes in energy and water bills, adjustments to vehicle excise duty, and rises to council taxes.

5. Oil rises

Oil prices surged higher following reports Israel is preparing a strike on Iranian nuclear facilities, raising fears supply could be hit from this key Middle East producing region.

At 03:22 ET, Brent futures soared 1.1% to $66.08 a barrel, and U.S. West Texas Intermediate crude futures rose 1.2% to $62.77 a barrel.

Israel is preparing for a potential military strike on Iranian nuclear facilities, as the U.S. continues to pursue a diplomatic agreement with Tehran, CNN reported on Tuesday, citing multiple U.S. officials familiar with recent intelligence.

The report said that the Israeli leaders have not made a final decision yet, but the likelihood of an Israeli strike has "gone up significantly" in recent months.

Additionally, U.S. crude stockpiles increased by approximately 2.5 million barrels for the week ending May 16, according to data from the American Petroleum Institute on Tuesday, defying forecasts for a 1.9 million-barrel draw.

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