Aug 10 (Reuters) – S&P 500 and Nasdaq futures inched higher on Monday as investors weighed developments in the Middle East that could influence the reopening of the Strait of Hormuz, kicking off the week laden with crucial inflation data and earnings.
Iran said it was close to a final agreement with Oman defining new shipping lanes between them through the strait but repeated that the U.S. must meet several conditions before the strategic waterway is reopened.
The easing of energy flows through the crucial choke point could mitigate concerns over heightened oil prices that have spurred inflation concerns and chances of interest rate hikes by central banks around the world.
Against this backdrop, readings of consumer and producer prices due later this week could be key to garnering clues on the Federal Reserve’s monetary policy path, given Fed Chair Kevin Warsh’s stance of offering muted forward guidance.
“Attention this week will be firmly on July US CPI, which could go a long way towards tipping the balance for September FOMC pricing,” analysts at Deutsche Bank Research said in a note.
Near-term interest rate-hike bets, however, tempered on Friday after data showed the U.S. economy unexpectedly shed jobs in July. Traders currently are pricing in a 44% chance of a rate hike in September, according to the CME FedWatch tool.
Comments from Cleveland Fed President Beth Hammack are expected later in the day, along with a retail sales reading on Friday.
At 5:37 a.m. ET, Dow E-minis were down 20 points, or 0.04%, and S&P 500 E-minis were up 11.25 points, or 0.14%. Nasdaq 100 E-minis were up 118.5 points, or 0.4%.
The benchmark S&P 500 hit a record close on Friday and the blue-chip Dow touched record highs last week as easing rate-hike concerns, upbeat earnings and optimism over a deal to end the Iran conflict lifted sentiment.
The recent run has lifted the S&P 500’s yearly gains to over 13%, with solid earnings especially from AI companies offsetting some concerns about high spending not yielding enough evidence of paying off.
J.P.Morgan raised its year-end target for the benchmark to 8,000 from 7,800, pointing to robust corporate earnings and increasing optimism that hyperscalers’ AI investments will accelerate revenue growth.
Of the 436 companies in the S&P 500 that have reported earnings to date for the June quarter, 85.1% have beaten analysts’ expectations, according to LSEG data. The beat-rate stands well above the 67% seen in a typical quarter since 1994.
The earnings calendar thins out this week, with semiconductor company Applied Materials, networking equipment maker Cisco and cloud infrastructure technology company CoreWeave among the few reporting.
Among early movers, Elon Musk’s SpaceX climbed 3.3%, building on a 22.8% jump clocked last week.
Megacap and growth stocks were mostly higher. Tesla led gains with a 1.1% rise.
Separately, the U.S. Senate led by Republicans passed a temporary bill to fund federal agencies through December 11 on Saturday, averting a crippling shutdown weeks before the November midterm elections.
(Reporting by Avinash P in Bengaluru; Editing by Maju Samuel)
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