US stock futures rose on Monday as worries over the fallout from Iran’s attack on Israel eased, allowing focus to return to earnings season and inflation risks to rate-cut hopes.
S&P 500 (^GSPC) futures added 0.4%, while Dow Jones Industrial Average (^DJI) moved up roughly 0.3% after ending the week with sharp losses. The tech-heavy Nasdaq 100 (^NDX) led gains, with futures up 0.5%.
Calm is returning as investors shrug off initial concerns of a full-blown war in the Middle East after Iran’s direct missile and drone strike on Israel on Saturday. Efforts by the US to encourage Israel not to retaliate have helped settle nerves, in part given the well-telegraphed attack allowed damage to be contained.
Stocks have come under pressure as earnings season got off to a lackluster start and concerns persist that inflation has stalled in cooling to the Federal Reserve’s 2% target. Traders have scaled back bets on the depth of Fed interest-rate cuts this year in the face of disappointing economic data.
Eyes are now on results from Wall Street heavyweights Goldman Sachs (GS) and Charles Schwab (SCHW) later on Monday, given many investors are looking to corporate results to revive the early 2024 equity rally.
In commodities, oil prices fell about 1% on Monday after rising ahead of Iran’s air strike. West Texas Intermediate crude futures (CL=F) trading at just below $85 a barrel and Brent futures (BZ=F) above $89.
Meanwhile, the 10-year Treasury yield (^TNX) added four basis points to trade near 4.57%, coming back from a sharp fall on Friday to eye a return to last week’s five-month high. Fellow safe haven gold (GC=F) was 0.3% lower, after gaining as much as 1.2% last week as Middle East tensions escalated.
Citigroup is opening “upside catalyst watches” on shares of Nvidia (NVDA) and Intel (INTC) after both have tanked in the past month.
On Nvidia:
“Recent supply chain discussions indicate demand visibility has extended into the first half of 2025 with calendar year 2024/2025 GPU [chip] unit outlook well aligned with our 4.3 million/5.2 million base case model. We expect supply chain commentary from key foundry/memory suppliers during earnings and Computex Taiwan on June 2nd where Nvidia CEO Jensen Huang will deliver a keynote which could be positive catalysts for the stock.”
On Intel:
“Intel stock is down ~29% year to date and we believe the stock is experiencing negative sentiment due to the foundry businesses losses. Given the positive March notebook data of a 44% month on month increase, we believe there is upside to consensus estimates and expect the stock to trade higher as Intel derives roughly 31% of revenue from notebook CPUs.”
While markets are handling the weekend news of Iran’s strike on Israel in stride, it’s important to keep on connecting the dots on these geopolitical risks.
Specifically as it pertains to oil, which Citi thinks could now hit $100 a barrel.
The potential effects of higher oil prices on global growth and inflation are being closely monitored by investors and analysts, with implications for central bank policies and market dynamics. Stay tuned for further developments as the situation continues to unfold.
