Stock market today: US futures rise as nerves calm after attack on Iran

Stock Market Today: US Futures Rise as Nerves Calm After Attack on Iran

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U.S. stock futures rose on Monday as worries about the fallout from Iran’s attack on Israel eased, allowing focus to return to earnings season and inflation risks fueling interest rate cut hopes.

S&P 500 (^GSPC) futures gained 0.4%, while the Dow Jones Industrial Average (^DJI) gained about 0.3% after ending the week with steep losses. The tech-heavy Nasdaq 100 (^NDX) led the gains, with futures up 0.5%.

Calm is returning as investors shake off initial worries about a full-scale war in the Middle East following Iran’s direct missile and drone attack on Israel on Saturday. U.S. efforts to encourage Israel to retaliate have helped calm nerves, in part because the well-announced attack made it possible to contain the damage.

Stocks came under pressure as earnings season got off to a lackluster start and concerns remain that inflation has stalled as it cools to the Federal Reserve’s 2 percent target. Traders have trimmed their bets on the extent of Fed rate cuts this year amid disappointing economic data.

Eyes now turn to results from Wall Street heavyweights Goldman Sachs (GS) and Charles Schwab (SCHW) later Monday, as many investors await corporate results to revive the early 2024 stock rally.

In commodities, oil prices fell about 1% on Monday after rising ahead of the Iranian airstrike. West Texas Intermediate crude oil futures (CL=F) are trading at just under $85 a barrel and Brent futures (BZ=F) are trading above $89.

Meanwhile, the 10-year Treasury yield (^TNX) gained four basis points to trade near 4.57% after falling sharply on Friday and eyeing a return to last week’s five-month high. Fellow safe-haven gold (GC=F) fell 0.3% after rising 1.2% last week amid escalating tensions in the Middle East.

live3 updates

  • Salesforce could be looking for deals

    Multiple reports have surfaced that Salesforce (CRM) is close to a deal to buy data management company Informatica (INFA) for about $11 billion — which is why both tickers are at the top of Yahoo Finance’s Trending Tickers page this morning.

    Salesforce shares are down on the news as sentiment on the Street is unclear whether the company would be a great fit (for one thing, it has lower margins than Salesforce).

    The Street also liked Salesforce’s increased focus on improving profit margins last year after it struggled with a surprise attack from activist investors (due in part to a series of dilutive acquisitions). This would be Salesforce’s first major deal since purchasing Slack in 2021 for $28 billion.

    Informatica stock is lower as Salesforce reportedly may not offer a premium for the company.

    Knowing Salesforce co-founder and CEO Marc Benioff, I’m a little surprised at the possible return to business operations. He’s told me several times over the last few months that Salesforce remains focused on increasing profit margins – in fact, the company disbanded its M&A team last year!

    Still, Benioff loves making big deals, and the company has the cash to close them. So why not.

  • Eyes on Nvidia and Intel

    Citigroup is opening “upside catalyst watches” on shares of Nvidia (NVDA) and Intel (INTC) after both slumped last month.

    On Nvidia:

    “Recent supply chain discussions indicate that demand visibility with GPU for the 2024/2025 calendar year has extended into the first half of 2025 [chip] The unit outlook lines up well with our base model of 4.3 million/5.2 million. We expect supply chain comments from key foundry/memory suppliers during earnings and Computex Taiwan on June 2, where Nvidia CEO Jensen Huang will deliver a keynote speech that could provide positive momentum for the stock.”

    On Intel:

    “Intel shares are down approximately 29% year-to-date and we believe there is negative sentiment on the stock due to losses in the foundry business. Given the positive March notebook data with a 44% month-over-month increase, we believe the consensus estimates have upside potential and expect the stock to trade higher as Intel generates approximately 31% of notebook CPU sales. “

    Further analysis: In the Sunday Morning Brief newsletter, I took a slightly contrarian view of Nvidia’s share price performance. More about that here.

  • Continue to connect the dots to the Iran-Israel conflict

    As markets calmly digest the weekend news of Iran’s attack on Israel, it is important to continue to monitor these geopolitical risks.

    Especially when it comes to oil, which Citi believes could now reach $100 a barrel.

    I liked the point-to-point summary that the Deutsche Bank team did on the oil front this morning:

    “The impact of higher oil prices will be felt most immediately globally, and this comes at a time when there are already concerns about stubborn inflation in several countries. That could create a dilemma for central banks, as we later found out.” Russia’s invasion of Ukraine in 2022. On the one hand, there is a risk that a geopolitical shock could hurt growth and bring forward the timing of interest rate cuts. In fact, markets clearly priced in this risk on Friday, with the possibility of a Fed rate cut rising from 24% to 30% by June, although it has fallen back to 24% this morning. But if higher oil prices lead to more inflation and there are second-round effects on other prices, then that could have implications for monetary policy having to stay in restrictive territory for longer, so the potential impact could work in both directions.

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