US stock futures traded with healthy gains on Monday, 6 July, led by a mild rebound in technology stocks, while lower crude oil prices also supported market sentiment. Investors are also closely watching key events lined up this week, including the release of the US Federal Reserve’s meeting minutes.
Nasdaq 100 futures climbed 1% after the US holiday break, while futures tied to the Dow Jones Industrial Average were little changed, and S&P 500 futures rose 0.4%.
All three benchmark indices ended last week in the green, with the Dow Jones climbing nearly 2%, bringing it within striking distance of the 53,000 mark, a level it has never reached.
The S&P 500 and Nasdaq Composite also posted solid weekly gains of 1.8% and 2.1%, respectively. However, chip stocks—which had driven Wall Street’s sharp rally this year—have recently lost momentum as investors grew concerned that the AI-driven rally had gone too far, too fast, prompting profit booking. Weak cues from some Asian markets also kept sentiment toward semiconductor stocks subdued.
Samsung Electronics will remain in focus as the South Korean chipmaker is scheduled to report earnings on Tuesday following its 165% year-to-date rally. The results are expected to provide further insight into demand for artificial intelligence-related memory chips.
The South Korean technology giant is expected to report an 18-fold jump in profit, driven by booming demand for AI memory chips, although hefty bonus payouts could weigh on overall earnings.
The earnings report will be followed later this week by SK Hynix Inc’s $29 billion US listing. These developments come as global markets experience uneven trading, with investors questioning whether the AI-led rally over the past quarter has become overstretched.
Meanwhile, the US dollar edged higher as it recovered from recent declines triggered by easing expectations of US interest rate hikes. The reassessment of rate expectations followed last Thursday’s weaker-than-expected nonfarm payrolls data, along with comments from Federal Reserve Chair Kevin Warsh last Wednesday that inflationary risks had eased.
Looking ahead, investors will closely monitor the minutes of the Federal Reserve’s latest policy meeting, due on Wednesday, for fresh clues on policymakers’ thinking. However, the minutes are likely to predate the recent increase in oil flows through the Strait of Hormuz, which has eased concerns over energy-driven inflation.
Investor attention will also shift to the start of the US earnings season this week. Among the first major companies scheduled to report are Delta Air Lines and PepsiCo, whose results could provide further insight into the health of the US consumer.
Crude oil prices remain lower
Crude oil prices continued to hover near a four-month low as traffic through the Strait of Hormuz picked up further over the weekend, prompting OPEC+ members to approve another modest production increase for next month. Seven countries, led by Saudi Arabia and Russia, agreed to raise output by 188,000 barrels per day (bpd).
The move comes as major oil producers have already ramped up production after confidence improved following the easing of tensions between the US and Iran.
Brent crude futures fell another $1 to an intraday low of around $71 a barrel, while West Texas Intermediate (WTI) crude futures also slipped $1 to nearly $64 a barrel.
According to a Bloomberg survey, OPEC’s crude oil production surged last month as Persian Gulf producers restored exports through the Strait of Hormuz following the peace accord between the US and Iran.
The survey showed that OPEC’s output rose by 2.34 million barrels per day to 18.75 million barrels per day, led by higher production from Kuwait, Saudi Arabia, and Iran. However, production still remains well below pre-war levels, according to the report.
(With inputs from Bloomberg and Reuters)
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