U.S. stocks paused their advance on Wednesday as investors waited for Micron Technology's earnings report.

Meanwhile, global bond prices edged slightly higher but remained on track for their worst monthly performance in years.

Deteriorating government fiscal positions, a surge in bond issuance, and rising inflation have combined to weigh on the market, while the seven-month-long U.S.-Israel conflict with Iran has kept energy costs elevated.

By contrast, stock markets have held up more firmly, largely shrugging off the recent spike in bond yields.

Strong corporate earnings growth, global economic resilience, and persistent market enthusiasm for artificial intelligence have all provided support for equities.

Major stock indices in Asia and Europe were broadly higher.

As of publication, Dow futures were up 0.01%, S&P 500 futures were up 0.03%, and Nasdaq futures were down 0.09%.

European stocks rose 0.6%. Although the index is expected to fall 1.4% this month, it is roughly flat for the quarter overall.

The MSCI Asia-Pacific ex-Japan index gained 0.3% and is expected to decline 1.1% this month.

Japan's Nikkei 225 surged 1.9% and is expected to rise 0.6% this month, though it is projected to fall 4.7% for the quarter.

South Korea's KOSPI is expected to gain 0.3% this month but could tumble 19% for the quarter.

Wall Street Holds Its Breath: Will Micron (MU.US) Earnings Deliver a Surprise?

Driven by the powerful AI wave, Micron Technology (MU.US) is set to release its highly anticipated latest earnings after the close on Wednesday, with the market broadly expecting a strong report.

According to Visible Alpha forecasts, Micron's fourth-quarter revenue is expected to reach $50.95 billion, a year-over-year increase of 350%.

Adjusted earnings per share are projected at $31.63, more than 10 times the year-ago figure.

JPMorgan analyst Harlan Sur noted that investors should pay closer attention to potential "surprises" management might unveil — such as a large-scale new capital return plan, which typically signals significant share buybacks or increased dividend payouts.

Micron shares rose 0.3% in premarket trading.

The AI Test Arrives

The market is about to close out a wildly volatile month.

With energy-driven inflationary pressures persisting, investors sharply repriced U.S. rate hike expectations, triggering a fierce selloff in the bond market.

The S&P 500's decline was relatively limited, partly due to a narrow rally in AI-related stocks, as investors remain optimistic about the sector's outlook.

That view will face a test when Micron reports earnings after the close.

Rory McPherson of Magnus Financial Discretionary Management said: "The bar for earnings has become very, very high, so these companies will most likely deliver decent numbers, but ultimately all of this still comes down to the demand story, and we need to keep seeing demand remain strong."

He said: "As long as that holds up, I expect the tech trade to continue."

Inflation in both France and Italy came in above expectations, adding further pressure on the European Central Bank to continue raising rates.

The risk premium on French 10-year government bonds relative to German bunds widened by 1 basis point to 120 basis points, the highest level since 2012.

All Eyes on the Bond Market

Rising borrowing costs have been one of investors' top concerns, as sovereign bond yields serve as a key pricing anchor for global markets — not only an important reference for investors allocating to higher-risk equities, but also a benchmark for mortgage and corporate financing costs.

In early European trading, the U.S. 10-year Treasury yield stood at 5.209%, down 4.6 basis points from the previous session but still near its highest level since June 2007.

So far this month, the yield has risen more than 45 basis points, on track for its largest monthly increase in nearly two years.

Bond yields and prices move in opposite directions.

The U.S. 2-year Treasury yield fell 1.9 basis points to 4.870%.

Earlier, New York Fed President John Williams cooled market expectations for premature bets on further tightening, though the yield is still up more than 50 basis points this month.

Carlo Franchini, head of institutional clients at Banca Ifigest in Milan, said: "We've reached a truly significant yield level. The temptation for investors to shift from stocks to bonds could become a problem."

However, Franchini said he has not yet taken profits on equities.

He believes that if tensions around the Strait of Hormuz ease, pulling oil prices lower and relieving pressure on bond yields, stocks could still find support in October.

He said: "In my view, it's better to stay long."

This week, German and French 10-year government bond yields rose to 17-year and 18-year highs, respectively, and are expected to rise about 70 basis points and 120 basis points for the quarter.

In Japan, the 10-year government bond yield hovered near multi-decade highs and is expected to rise 38 basis points for the quarter.

Despite the sharp increase in sovereign borrowing costs this quarter, global stock markets have generally shown strong resilience.

Dollar Strengthens, Yen Accelerates Higher

Brent crude oil edged up above $103 per barrel, gaining about 14% this month, even as the latest signs showed Middle Eastern crude flows recovering to pre-war levels.

In foreign exchange markets, the dollar is expected to rise about 2% this month, supported by rising U.S. Treasury yields, though it slipped 0.1% on the day.

The euro traded near 1.1346 against the dollar, slightly above its 16-month low.

It is expected to fall 2.3% this month, as the global energy shock and rising European political risks continue to weigh on the euro.

The pound rose 0.2% to $1.326 but is expected to fall 2.1% this month.

The yen rose 0.2% to 156.95 per dollar and is expected to gain 1.7% this month.

Amid concerns that Tokyo and Washington may again intervene jointly, investors remain cautious about further shorting the yen.

U.S. mortgage rates climbed for a sixth consecutive week, dealing a heavy blow to refinancing and home purchase demand.

The Mortgage Bankers Association's seasonally adjusted index showed a 6% weekly drop in mortgage demand.

Last week, the average contract rate on 30-year fixed-rate mortgages conforming to standard loan balance requirements rose from 7.12% to 7.30%.

For loans with a 20% down payment, points including loan origination fees rose from 0.73 to 0.75.

Refinancing demand was hit hardest, as very few borrowers can benefit in the current higher-rate environment.

Refinance applications fell 9% for the week and were 56% lower than a year ago.

Refinancing's share of total mortgage activity fell to 38.3% from 39.3% the previous week.

MBA economist Joel Kan said in a statement: "Government-backed refinance activity fell 13%, with both FHA and VA loan applications posting double-digit weekly declines."

Stocks in Focus

Boeing shares rose 2% after winning a defense department equipment development contract.

The $20 billion contract tasks Boeing with developing the sixth-generation F/A-XX strike fighter.

Northrop Grumman (NOC), which lost the competition, saw its shares plunge 3.5%.

Online brokerage platform Robinhood announced the launch of an in-app AI agent for traders, sending its shares up 2%.

The company also announced it will soon offer round-the-clock 24/7 trading for select stocks to U.S. users and launch perpetual futures products.

Concentrix released its third-quarter earnings, with revenue slightly below market expectations, sending shares down 9.5%.

Analyst data compiled by FactSet showed the company's non-GAAP earnings per share and current-quarter revenue guidance also fell short of expectations; the company said on its earnings call that its transition to AI businesses is pressuring revenue.

Moderna shares fell more than 6% after Citigroup published a research note on the stock.

The bank's analyst set a target price 60% below the stock's Tuesday closing price, arguing the current valuation is unreasonable.

Deutsche Bank initiated coverage of semiconductor testing company FormFactor with a buy rating, lifting the stock 1%.

The analyst said intensifying chip testing demand will benefit the company; FormFactor has become "the second supplier of probe cards for Nvidia GPUs manufactured by TSMC," and the company is benefiting as a result.

Egg producer Cal-Maine Foods reported first-quarter earnings with a loss wider than market expectations, sending shares down more than 6.5%.

The company posted a loss of $1.26 per share, compared with analyst expectations of a loss of $0.77 per share compiled by FactSet.