U.S. stock futures rise as chip shares stabilize, oil surge weighs on airlines

Traders Union
All News
Financial News
US stock futures rise

Highlights

Nvidia, Broadcom, and Micron Technology rise 1.5%–3.9% premarket, lifting S&P 500 e-minis by 0.35% and Nasdaq 100 e-minis by 0.69%.
CME FedWatch shows 42% probability of a 25-basis-point Fed rate hike in December after stronger-than-expected May jobs data increases rate hike bets.
Crude surges over 4% to above $95 a barrel on renewed Middle East conflict, pressuring airline shares with Southwest and American Airlines down 2.4% premarket.

Chip rebound and rate expectations

As reported by Reuters, shares of Nvidia, Broadcom and Micron Technology are rising between 1.5% and 3.9% in premarket trading, helping lift S&P 500 and Nasdaq futures after the sector fell to more than two-week lows. The rebound follows concerns sparked last week by Broadcom's results and by worries that enthusiasm around artificial intelligence has pushed valuations too far, too quickly.

Mark Haefele, chief investment officer at UBS Global Wealth Management, says he does not expect investors to lose confidence in the AI outlook, adding that business fundamentals remain strong despite recent pressure on technology stocks. By 06:07 a.m. ET, S&P 500 e-minis are up 25.75 points, or 0.35%, Nasdaq 100 e-minis gain 200.75 points, or 0.69%, and Dow e-minis are down 47 points, or 0.09%.

Stronger-than-expected U.S. jobs data for May also contributes to the recent market retreat, as traders increase bets that the Federal Reserve could raise interest rates again this year. CME Group's FedWatch tool shows futures pricing implies a 42% chance of a 25-basis-point rate hike in December, while Wednesday's May consumer price report is expected to offer a clearer reading on how higher energy costs are feeding into inflation.

Middle East conflict and sector moves

Crude prices are rising more than 4% to above $95 a barrel as renewed Israeli strikes on Iran and fresh attacks on Lebanon undermine hopes for a near-term end to the wider war. The move in oil is adding another layer of caution for investors already weighing inflation risks and the outlook for monetary policy.

Airline shares are among the early losers, with Southwest Airlines and American Airlines each falling 2.4% in premarket trading on concerns that higher fuel costs could pressure margins. Elsewhere, Marvell Technology jumps 6.6% before the bell as it is set to join the benchmark S&P 500 before trading begins on June 22, while Eli Lilly rises 4.1% after trial data for its obesity drug retatrutide shows benefits for sleep apnea severity, weight loss and knee pain.

In our earlier article on the post-jobs-data U.S. market sell-off and renewed rate-hike expectations, we explained how a stronger-than-expected payrolls report lifted Treasury yields and revived bets on additional Fed tightening. We also noted that higher borrowing costs tend to pressure richly valued AI and semiconductor names the most, testing the durability of the tech-led rally.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.