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US stock indices are heading towards a positive opening during Tuesday’s trading, supported by the continued recovery of semiconductor and artificial intelligence stocks for the second day in a row, along with a decrease in the intensity of geopolitical concerns after a relative calm in the confrontation between Iran and Israel.
Futures contracts showed the Nasdaq index rising 0.7% ahead of the opening, leading gains among the major indices, while S&P 500 futures rose 0.36%, and Dow Jones futures climbed about 0.21%.
Shares of semiconductor companies led the moves, with Marvell Technology , Broadcom and Micron Technology all posting strong gains in pre-opening trading, following the sharp sell-off that hit the sector last Friday.
Technology and artificial intelligence stocks came under significant pressure last week after Broadcom’s future outlook raised investor concerns about the excessively high valuations of chip companies, especially after the strong gains they had made in recent months.
But analysts believe the market is still finding support from strong earnings forecasts. Ken Mahoney, CEO of Mahoney Asset Management, noted that many analysts have yet to raise their earnings estimates for technology companies, which is helping to maintain the positive momentum for stocks despite ongoing concerns about inflation, interest rates, and geopolitical conditions.
On the political front, the announcement of a halt to the tit-for-tat attacks between Iran and Israel contributed to a relative calm in the markets, after both countries responded to a call from US President Donald Trump to de-escalate. Despite continued caution due to the lack of a lasting peace agreement and the ongoing closure of the Strait of Hormuz, the reduction in tensions was directly reflected in oil prices.
Oil prices fell by more than 2% during the session, giving up most of the gains made the previous day, which helped to ease concerns related to inflation and rising energy costs. Investors are now focused this week on the US inflation data for May, due on Wednesday, which could provide important clues about the impact of rising energy prices stemming from the Middle East crisis on the US economy.
Markets are also closely watching the direction of monetary policy following last week’s strong jobs report, which raised concerns about a possible Federal Reserve interest rate hike later this year. Current market pricing suggests a near 43% probability of a 25-basis-point increase at the December meeting.
Meanwhile, markets are gearing up for the extraordinary initial public offering (IPO) of Elon Musk’s SpaceX, which is targeting a valuation of approximately $1.75 trillion and aiming to raise $75 billion, making it the largest IPO in history. Some investors believe this offering could be a crucial test of enthusiasm for growth and technology stocks.
In another development that caught the market’s attention, Applied Digital’s stock rose by more than 11% after the company announced it had signed a 15-year lease with a major US cloud computing company, a deal the company expects to generate up to $5.2 billion in revenue over the agreement’s term. Nuvalent’s stock also jumped nearly 40% after GSK announced its acquisition of the company for $10.6 billion, the largest acquisition by the British firm in years.
