Nasdaq futures climbed on Tuesday after Palantir and ON Semiconductor delivered upbeat forecasts, easing investor worries about AI-linked spending. The S&P 500 sits within reach of a record high and the Dow closed at one Monday, while traders now weigh a stronger-than-usual earnings season against Tuesday's jobs data and Fed rate-hike odds.
AI forecasts drive the rally
Palantir Technologies gained 17.2% in premarket trading after raising its annual revenue forecast again, a sign of strong government and commercial demand for its AI-powered data analytics software. Chipmaker ON Semiconductor added 7.5% after forecasting quarterly revenue above expectations, betting on demand for power management chips used in AI data centers.
Investors have been scrutinizing results from AI-linked companies this earnings season for signs their billion-dollar investments are paying off. Strong results from Microsoft and Amazon last week were a relief and have underpinned gains on Wall Street since then.
Records within reach for S&P 500 and Dow
The benchmark S&P 500 is about 21 points from its first record high since June. The blue-chip Dow closed at a record high on Monday for the first time since July.
Other AI-linked stocks also moved: Micron added 2.3%, Nvidia rose 0.7% and Marvell rose 4.4%. At 5:16 a.m. ET, Dow E-minis were up 34 points, or 0.06%, and S&P 500 E-minis were up 5 points, or 0.07%. Nasdaq 100 E-minis were up 129.25 points, or 0.45%.
Earnings season beats historical pace
Overall, this earnings season has so far been better than historical standards. Of the 304 companies in the S&P 500 that had reported second-quarter earnings as of Friday, 85.2% beat estimates, versus the long-term average of 67.5%.
Snap jumped 8.1% after beating second-quarter revenue estimates, helped by increased advertising spending during the FIFA World Cup and stronger campaign activity from large advertisers in North America. Big names due to report Tuesday include drugmakers Merck and Pfizer, global economy bellwether Caterpillar, Marathon Petroleum and McDonald's.
Jobs data and Fed outlook in focus
Attention later in the day shifts to economic data. The Labor Department's Job Openings and Labor Turnover Survey, due 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. Reports on factory orders and trade, plus remarks from Kansas City Fed President Jeffrey Schmid, could add insight into the health of the economy.
Investors will also parse the data for clues on the rate hike outlook at a time when the U.S.-Iran standoff in the Middle East keeps crude prices elevated and the Fed has offered little guidance on monetary policy. Traders see a 63.4% chance the central bank will hike rates by at least 25 basis points when it meets next month, according to the CME FedWatch Tool.
Source: Investing.com
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