July 27 (Reuters) – Wall Street’s main stock index futures rose on Monday as the United States and Iran announced a pause in hostilities over the weekend, sending oil prices sharply lower.
A wide swathe of stocks sensitive to energy prices rose in premarket trading. Airlines including Delta and American were among the top gainers, rising 2.6% and 3%, respectively. Cruise operators Royal Caribbean and Carnival rose 3.2% each.
A 6.3% slide in Brent Crude prices to $90.6 a barrel weighed on shares of energy companies such as Occidental Petroleum and Exxon Mobil. They were down 3.8% and 2.6%, respectively.
Markets ended last week rattled by escalating Middle East tensions, with investors worried the conflict could fuel further price pressures ahead of the Federal Reserve’s monetary policy decision later this week.
Despite the announcement of the pause in attacks, shipping through the crucial Strait of Hormuz remained low. Attacks by Yemen’s Iran-aligned Houthis on Saudi oil installations along the Red Sea coast, another waterway vital to the global oil trade, also kept traders on edge.
The Fed has offered few clues on monetary policy outlook since Kevin Warsh took over as chair, fueling uncertainty over the path ahead for interest rates.
Investors are pricing in at least 25 basis points worth of rate hikes this year, with a 31% chance it could come as early as this week, LSEG-compiled data showed.
At 04:25 a.m. ET, Dow E-minis were up 443 points, or 0.85%, and S&P 500 E-minis were up 65 points, or 0.87%. Nasdaq 100 E-minis were up 421.75 points, or 1.49%.
Futures tracking the interest-rate sensitive Russell 2000 small-cap index rose 1.2%, while the CBOE Volatility index dipped about 0.87 points to 17.7.
Earnings from several ‘Magnificent Seven’ companies including Microsoft, Amazon.com, Meta and Apple are due this week and will test the AI trade further.
Microsoft, Amazon.com and Meta were up over 1% each, while Apple edged up 0.3%. Chip stocks Marvell Technology gained 3.5%, Micron added 3.2% and industry leader Nvidia rose 1.2%.
Negative cash-flow reports from Alphabet and Tesla last week added to concerns about debt-fueled corporate spending on developing the technology.
The tech-heavy Nasdaq is down 8% from its record high, while earlier this month the Philadelphia SE Semiconductor Index confirmed it has been in “bear market” territory since late June.
An index closing 10% below its most recent record high is called a technical correction, while a 20% drop is referred to as a bear market.
(Reporting by Johann M Cherian in Bengaluru; Editing by Saumyadeb Chakrabarty)
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