May 5 - U.S. stock index futures moved higher on Tuesday morning, pointing to a recovery in equities as oil slipped, even while a flare-up of hostilities in the Middle East threatened to disturb a fragile truce after the U.S. and Iran exchanged fire in the Gulf. Market sentiment remains caught between the direct effects of the conflict and the shifting dynamics on the ground.
At 5:35 a.m. ET, Dow e-minis were up 124 points, or 0.25%. S&P 500 E-minis rose 23.75 points, or 0.33%, and Nasdaq 100 E-minis added 160 points, or 0.58%. Brent crude futures were down 1.35%, but still trading above $110 a barrel.
Investors described recent market moves as volatile, with trading patterns susceptible to sudden reversals as new headlines arrive and sometimes contradict prior accounts. Some market participants argue that the market has not fully priced in worst-case scenarios related to the conflict, while others contend attention should remain on the underlying economic picture and a solid corporate earnings backdrop.
BlackRock Investment Institute analysts, led by Global Chief Investment Strategist Wei Li, noted in a briefing that "U.S. earnings are on a roll. The broader earnings backdrop looks healthy as well." They added a caution: "even U.S. equities won’t be insulated" if the crucial oil shipping route through the Strait of Hormuz does not open.
Broader U.S. equity performance has been resilient, supported in part by the country’s position as a net energy exporter. This resilience was reflected in recent moves by major benchmarks, with the S&P 500 and the Nasdaq Composite having reached record highs in recent days.
On the individual stock front, shares of Pinterest jumped 16.1% in premarket trading after the image-sharing company forecast second-quarter revenue above analysts’ estimates. Intel climbed 3.8% following a Bloomberg News report that Apple had held exploratory discussions about using Intel and Samsung Electronics to produce the main processors for its devices.
Market participants are also awaiting a key piece of labor market data. The U.S. Labor Department’s Job Openings and Labor Turnover Survey, known as the JOLTS report, is scheduled for release at 10 a.m. ET and will be scrutinized for additional insight into the employment picture.
Overall, early gains in futures reflect a tentative rebound as lower oil prices alleviated some immediate inflation and growth concerns, but geopolitical risk in the Gulf and a stream of news headlines continue to make the path for risk assets uncertain.