Earnings and Tensions Drive Markets
US Futures Gain Ahead of Key Megacap Earnings Amid Iran Tensions and Chip Volatility
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Key Points
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Memory chipmakers staged an early rebound, with Western Digital, Seagate Technology, Micron Technology, and SanDisk trading around 3.2% as the sector attempted to stabilize after a rough stretch.
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Iranian diplomacy signals offered some relief to risk appetite, with Iranian Foreign Ministry spokesman Esmail Baghaei suggesting intermediaries were still exchanging messages and negotiations could move forward if aligned with Iran's national interests.
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Canada-specific data looming over markets include June inflation expected at about 2.9%, cooling from the prior month, and a roughly 56% probability that the Bank of Canada will raise rates by at least 25 basis points in December.
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Despite broader risk concerns, semiconductor stocks remained under pressure with the VanEck Semiconductor ETF (SMH) plunging nearly 9% last week on concerns tied to Taiwan Semiconductor’s capex plans, highlighting sustained headwinds for chipmakers.
U.S. stock futures pointed higher Monday as investors braced for a critical week of megacap earnings. Nasdaq 100 futures rose 0.92%, S&P 500 futures gained 0.47%, and Dow futures climbed 0.23%, according to TS2 Space. The gains came after a brutal stretch for tech stocks, led by a nearly 9% plunge in the VanEck Semiconductor ETF last week.
Alphabet, Tesla, Intel, IBM, AT&T, and Verizon are all set to report this week, according to Free Malaysia Today. Investors will watch closely for any signals on AI spending and demand. Geopolitical risk lingered in the background after nine straight nights of U.S. strikes on Iran.
Chip Stocks Attempt a Bounce After Brutal Week
Semiconductor stocks led early gains Monday after getting hammered last week. Western Digital, Seagate Technology, Micron Technology, and SanDisk each traded up roughly 3.2%, according to Market Screener. The rebound came after the VanEck Semiconductor ETF dropped nearly 9% last week. Concerns about Taiwan Semiconductor's capital spending plans sparked the sell-off.
Despite Monday's early bounce, the sector faces real headwinds. Investors want clarity on AI chip demand before committing. The upcoming reports from Intel and other chipmakers will be key tests. Any weak guidance could renew selling pressure quickly, according to ADVFN.
Megacap Earnings Could Make or Break the AI Rally
This week's earnings are viewed as a turning point for markets. Alphabet, Tesla, Intel, and IBM report alongside telecom giants AT&T and Verizon, according to Free Malaysia Today. Together, they serve as a real-world test of whether the AI-driven stock rally has legs. Investors want concrete numbers on data center spending and demand.
The stakes are high. Tech shares drove much of the market's gains this year. If companies pull back on AI spending guidance, the broader rally could stall. Strong results, on the other hand, could push the Nasdaq back toward recent highs, according to Market Screener.
Iran Strike Diplomacy Offers Slight Relief to Markets
Geopolitical tension eased slightly Monday after diplomatic signals emerged from Iran. Iranian Foreign Ministry spokesman Esmail Baghaei said intermediaries were still exchanging messages. He added that talks could move forward if they aligned with Iran's national interests. The comments gave investors a small reason to reduce their risk concerns.
Still, the U.S. has now conducted nine straight nights of strikes on Iran. That streak kept risk appetite cautious. Oil prices, which typically spike on Middle East conflict, eased somewhat. Falling oil prices helped lift overall market sentiment, according to ADVFN.
Canadian Markets Watch Inflation Data and Rate Odds
Canadian futures edged higher Monday as traders tracked both global tensions and domestic data. June inflation is expected to come in around 2.9%, cooling from the prior month. Markets are pricing in roughly a 56% chance the Bank of Canada raises rates by at least 25 basis points in December. That uncertainty added a layer of caution for Canadian investors.
Energy prices also played a role. Canada's market is sensitive to swings in oil. Any sustained drop in crude linked to easing Iran tensions could weigh on energy stocks. Traders were watching U.S.-Iran developments closely for clues on where oil prices head next, according to TS2 Space.
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