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Stocks Today: U.S. Futures Rise as Tensions Calm After Iran Attacks
U.S. stocks rose on Monday as worries about the fallout from an Iranian attack on Israel eased, bringing the market back to focus on the earnings season and the risk of inflation, as well as hopes for a rate cut.
Futures on the S&P 500 (^GSPC) were up 0.4%, while the Dow Jones Industrial Average (^DJI) was up roughly 0.3% after ending the week sharply lower. the tech-heavy NASDAQ Resonance 100 (^NDX) led the way, with futures up 0.5%.
Investors shrugged off initial fears of an all-out war in the Middle East after Iran's direct missile and drone attack on Israel on Saturday, and calm returned to the scene. U.S. efforts to encourage Israel not to retaliate helped stabilize investor sentiment, in part because the well-planned attack kept losses contained.
Stocks are under pressure due to a lackluster start to the earnings season and ongoing concerns that inflation is stalling in the process of cooling the Fed's 2% target. In the face of disappointing economic data, traders have trimmed their bets on the Fed's rate cuts this year.
With many investors hoping to revive the early 2024 stock market rally with corporate results, the results of Wall Street heavyweights Goldman Sachs (GS) and Charles Schwab (SCHW) later Monday will be the focus of market attention.
On the commodities front, oil prices fell about 1% on Monday after rising before the Iranian airstrike, with West Texas resonance crude oil futures (CL=F) trading just below $85 a barrel and Brent crude oil futures (BZ=F) above $89 a barrel.
Meanwhile, the 10-year Treasury yield (^TNX) has risen 4 basis points to trade near 4.57%, recovering from Friday's sharp decline and on track to return to last week's five-month high. Gold (GC=F), also a safe haven, is down 0.3%, after rising 1.2% last week as tensions in the Middle East escalated.
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Brian Sozzi.Focus on INVISTA and Intel
Citi is opening an Upside Catalyst Watch on shares of NVDA (NVDA) and INTC (INTC).
About INVISTA:
"Recent supply chain discussions indicate that demand visibility extends into the first half of 2025, and the calendar year 2024/2025 GPU (chip) unit outlook is very much in line with our 4.3 million/5.2 million base model. We expect the major foundries/memory suppliers to present supply chain commentary in their earnings reports and at the Computex Taiwan show on June 2, where Nvidia's SimCEO Jen-Hsun Huang will give a keynote speech, which could have a positive catalytic effect on the stock price.
About Intel
"Intel shares are down about 29% so far this year, and we think the losses in the foundry business have led to negative sentiment. Given the good March notebook numbers, which were up 44% YoY, we think there is room for consensus to rise and expect the stock to move higher, as Intel generates about 31% of revenue from notebook CPUs.
Further analysis: I took an opposing view on Invista's stock price in the Sunday Morning Briefing. For more information, please click here.
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Brian Sozzi.
Continued focus on Iran/Israel conflict
While markets reacted calmly to the news of the Iranian attack on Israel over the weekend, it is important to remain focused on these geopolitical risks.
Citibank believes that the price of oil could now reach $100 per barrel.
I like the point of connection made by the Deutsche Bank team at the oil noodles this morning:
"Most immediately, the impact of higher oil prices will be felt globally, and this comes at a time when some countries are already worried about runaway inflation. This could put central banks in a dilemma, as we found out after the Russian invasion of Ukraine in 2022. On the one hand, geopolitical shocks could hurt economic growth and bring forward rate cuts. In fact, the market priced in this risk last Friday, when the likelihood of a Fed rate cut by June rose from 24% to 30%, but this morning it is back down to 24%. But then again, if the rise in the price of oil leads to a spike in inflation and a second round of impact on other prices, it could mean monetary policy has to stop for longer to validate it in a restrictive area. It could mean that monetary policy would have to remain in place for a longer period of time in areas where it could be targeted. Thus, the potential impact could be twofold.
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