By Johann M Cherian and Shashwat Chauhan
Aug 3 (Reuters) – U.S. stock index futures rose on Monday as signs of de-escalating tensions in the Middle East dragged down crude prices, while investors prepared for another week packed with earnings and economic data.
Traders also weighed a potential consolidation in the healthcare sector after a report said Bristol Myers Squibb and AstraZeneca held preliminary merger talks. A deal could form one of the world’s biggest drugmakers, worth nearly $400 billion.
The U.S. company’s shares gained 6% in premarket trading, while its UK rival slipped 5%.
In geopolitics, U.S. President Donald Trump said on Sunday that talks with Iran to reopen the Strait of Hormuz would take place sometime on Monday. Iran, however, contradicted him.
Brent crude prices slid 5% while the yield on the two-year Treasury note, reflecting short-term interest rate expectations, dipped 5.4 basis points. Higher energy costs since the start of the conflict have fueled uncertainty over repercussions on the global economy.
After earnings from Amazon and Microsoft last week alleviated some concerns about the lack of evidence that elevated AI spending are paying off, investors will be keen on how other major names fare.
“More government debt, increased issuance and persistent inflation have all contributed to a higher cost of capital, leaving earnings as the key driver of returns. We think this trend will continue,” Goldman Sachs analysts said.
SpaceX will report on Tuesday its first quarterly results since its public debut, with scrutiny on its AI spending and profits from its Starlink satellite communications network. Its shares, which have been trading below their $135 offering price for nearly three weeks, eased 0.9%.
Other AI-linked companies reporting this week include Palantir, Advanced Micro Devices, and data storage companies SanDisk and Western Digital.
Micron lost 3.2% after Reuters reported that Chinese rival CXMT is considering a second memory-chip plant in Beijing and is in financing talks with a tech manufacturing hub backed by the local government.
At 7:15 a.m. ET, Dow E-minis were up 466 points, or 0.89%, S&P 500 E-minis were up 40.25 points, or 0.54% and Nasdaq 100 E-minis were up 80.5 points, or 0.28%.
Wall Street had a rough July, bogged down by global concerns about the trajectory of artificial intelligence, future interest rate hikes and a raging conflict in the Middle East.
Adding to the uncertainty, Federal Reserve chair Kevin Warsh raised the idea of scheduling fewer rate-setting meetings, a report said — in line with his plan to reduce Fed rate guidance.
Traders are pricing in a 64% chance that the central bank would increase interest rates in September, the CME Group’s FedWatch Tool showed.
Healthcare, consumer and energy sectors will also be in focus, with earnings from Eli Lilly, McDonald’s and Occidental Petroleum among those due this week.
The week is also packed with several labor market reports, including the official nonfarm payrolls figures due on Friday. A business activity survey later in the day would give markets a clearer picture about the health of the manufacturing sector during July.
Traders also kept an eye on U.S.-Japan intervention in currency markets to halt the yen’s slide.
(Reporting by Johann M Cherian and Shashwat Chauhan in Bengaluru; Editing by Joyjeet Das)
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