Premarket: U.S. stock futures advance as strong AI-linked earnings continue
U.S. stock index futures rose on Tuesday after strong forecasts from Palantir and ON Semiconductor reassured investors about AI-driven demand, while Middle East developments and U.S. earnings were also in focus to gauge the health of corporate America.
Palantir Technologies gained 16 per cent in premarket trading after raising its annual revenue forecast again, while chipmaker On Semiconductor added 7.6 per cent after forecasting quarterly revenue above expectations.
Caterpillar jumped 7.5 per cent after the company, seen as a bellwether for the global industrial economy, reported a second-quarter profit that nearly doubled from a year earlier.
Investors have been scrutinizing results from AI-linked companies this earnings season for signs that their billion-dollar investments are yielding returns. Strong results from AI leaders Microsoft and Amazon last week were a relief and have underpinned gains on Wall Street following a turbulent July.
“Momentum-driven sectors often overshoot in both directions. But it is important not to confuse a momentum unwind with a fundamental deterioration,” said Brian Levitt, chief global market strategist at Invesco.
The benchmark S&P 500 is about 21 points from hitting its first record high since June, while the blue-chip Dow closed at a record high on Monday for the first time since July.
At 6:56 a.m. ET, Dow E-minis were up 343 points, or 0.64 per cent, S&P 500 E-minis were up 15.5 points, or 0.2 per cent, and Nasdaq 100 E-minis were up 225 points, or 0.78 per cent.
Other AI-linked stocks such as Micron added 3.5 per cent, Nvidia rose almost 1 per cent and Marvell climbed 8.5 per cent.
Overall, this earnings season has so far been better than historical standards. Of the 304 companies in the S&P 500 that have reported second-quarter earnings as of Friday, 85.2 per cent have beaten estimates, versus the long-term average of 67.5 per cent.
Elon Musk’s SpaceX will release its first earnings report since its public debut after markets close. Shares were up 1.3 per cent.
Snap jumped 6.8 per cent after beating second-quarter revenue estimates, thanks to increased advertising spending during the FIFA World Cup and stronger campaign activity from large advertisers in North America.
Shares of U.S. photonic firms Coherent and Lumentum added 11.8 per cent and 9.3 per cent, respectively, after Reuters reported the Trump administration is drafting a ban on U.S. imports of new models of Chinese data center components.
The focus later in the day will shift to economic data. The Labor Department’s Job Openings and Labor Turnover Survey, scheduled at 10 a.m. ET, is expected to show the economy created about 7.4 million jobs in June, lower than the 7.6 million in the month before.
Other reports on factory orders and trade for June, along with remarks by Kansas City Fed President Jeffrey Schmid, could also offer insights on the health of the economy.
Investors will parse the reports to also gauge the outlook for interest rates at a time when the U.S.-Iran standoff in the Middle East is keeping crude prices elevated, while the Federal Reserve has offered little guidance on monetary policy.
Traders see a 63.4 per cent chance that the central bank will hike rates by at least 25 basis points when it meets next month, the CME FedWatch Tool showed.
– European stocks climbed alongside U.S. futures on Tuesday, although a rebound in oil prices underscored market scepticism that the U.S.-Iran war would be resolved quickly through diplomacy.
Meanwhile the yen eased, but held on to most of its intervention-driven gains after last week’s joint action by Tokyo and Washington to support the currency.
Qatar Foreign Ministry spokesperson Majed Al Ansari said diplomatic efforts to resolve the U.S.-Iran war were ongoing, but an attack near the Strait of Hormuz underscored doubts that the conflict was nearing an end.
Brent futures rose 1.5 per cent to $85.05 a barrel after dropping 7 per cent in the previous session to a three-week low.
Europe’s STOXX 600 .STOXX was up 0.60 per cent, with tech stocks rising 1.85 per cent. MSCI’s main world stocks index rose 0.10 per cent.
“We are adding risk to sectors which should be less impacted by higher rates. Tech and financials would be our favourite sectors to add back risk in the portfolio,” Mohit Kumar, an economist at Jefferies, said, recalling the recent rally in bond yields.
“One underlying factor that continues to support our medium term bullish view is the amount of cash in the system,” he added.
The dollar was up 0.4 per cent at 157.80 yen, rebuilding strength after coordinated intervention by U.S. and Japanese authorities to prop up the yen last week.
The Japanese currency remains about 4 per cent stronger against the greenback compared with levels a week ago that prompted official support and marked the first U.S. intervention in the Japanese foreign exchange market in 15 years.
However, Japan’s expansionary fiscal policy and the Bank of Japan’s gradual pace of rate hikes could weigh on the yen, some market participants warn.
“The catalysts that can amplify the unwinding of short yen positions (supporting the currency) are, potentially, lower crude oil prices, BoJ policy tightening in September and thereafter, and some moderation in prime minister Sanae Takaichi’s fiscal plans, in order to bring debt sustainability back,” Thierry Wizman, global forex and rates strategist at Macquarie Group, said.
The U.S. dollar index, which measures the greenback against a basket of six currencies, was steady, not far from the lowest levels of the past two months at 99.97. Reuters
