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US futures rise as nerves calm after Iran attack

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U.S. stock futures rose on Monday as concerns over the impact of Iran's attack on Israel eased and the focus returned to inflation risks over earnings season and interest rate cut expectations.

S&P 500 (^GSPC) futures rose 0.4%, and the Dow Jones Industrial Average (^DJI), which ended the week with a sharp decline, rose about 0.3%. The tech-heavy Nasdaq 100 (^NDX) led the gains, with futures up 0.5%.

Calm is returning as investors shake off initial fears of 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 not to retaliate have helped calm tensions, in part because well-communicated attacks have been able to limit the damage.

Stocks have been weighed down by a lackluster start to the earnings season and concerns that inflation is slowing to the Federal Reserve's 2% target. Traders scaled back bets on the depth of the Fed's rate cuts this year after disappointing economic data.

Late Monday earnings results for Wall Street giants Goldman Sachs (GS) and Charles Schwab (SCHW), as many investors focus on corporate results to revive stock gains in early 2024. is attracting attention.

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

Meanwhile, the 10-year Treasury yield (^TNX) added 4 basis points to hover around 4.57%, recovering from Friday's plunge and aiming to return to a five-month high hit last week. Gold (GC=F), a fellow safe-haven asset, fell 0.3% after rising as much as 1.2% last week as tensions in the Middle East escalated.

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  • Salesforce may be exploring a deal

    Multiple reports have surfaced that Salesforce (CRM) is nearing an agreement to acquire data management company Informatica (INFA) for around $11 billion. — So this morning, both tickers are at the top of Yahoo Finance's “Trending Tickers” page.

    The news is that Salesforce stock is down because the prevailing sentiment is that it's unclear whether its business is an amazing fit (case in point: it has lower profit margins than Salesforce) .

    The Street also likes Salesforce's increased focus on expanding its profit margins after dealing with a surprise attack by activist investors last year, in part due to a series of dilutive acquisitions. This is Salesforce's first major deal since acquiring Slack in 2021 for $28 billion.

    According to reports, Informatica's stock price has fallen as Salesforce may not offer a premium for the company.

    Knowing Salesforce co-founder and CEO Marc Benioff, I was a little surprised that he could go back to closing deals. He has told me multiple times in recent months that Salesforce remains focused on improving margins. In fact, the company disbanded its M&A team last year.

    Nevertheless, Benioff loves making big deals, and the company has the funds to make them happen. So what do you think?

  • Focus on Nvidia and Intel

    Citigroup has initiated a “trigger watch'' on the stock prices of Nvidia (NVDA) and Intel (INTC) after the semiconductor maker's stock prices fell last month.

    For Nvidia:

    “Recent supply chain discussions indicate that GPU calendar year 2024/2025 will extend demand visibility into H1 2025. [chip] The unit outlook aligns well with the base case model of 4.3 million/5.2 million. There will be supply chain commentary from major foundries/memory suppliers during the earnings season, and Computex Taiwan, where NVIDIA CEO Jensen Huang will give a keynote speech on June 2nd, could be a positive catalyst for stock prices. I predict that. ”

    For Intel:

    “Intel stock is down ~29% year-to-date, and we believe the loss in the foundry business is driving the stock into negative sentiment. Notebook sales were strong in March, up 44% month-over-month. Given this data, we think there is room for upside to the consensus estimate.'' Intel derives about 31% of its revenue from notebook CPUs, so we expect the stock to rise further. ”

    Further analysis: I took a bit of a contrarian view on Nvidia's stock price performance in my Sunday Morning Brief newsletter. Learn more about.

  • Keep Connecting the Dots on the Iran/Israel Conflict

    As markets take in the weekend's news about Iran's attack on Israel well, it is important to continue to connect the dots on these geopolitical risks.

    For crude oil in particular, Citi believes prices could now reach $100 per barrel.

    I liked the connect the dots the Deutsche Bank team did this morning on the oil issue.

    “Most directly, the effects of rising oil prices will be felt around the world and this comes at a time when some countries are already concerned about rising inflation. This could create a dilemma for central banks. This is what we later found out.'' Russia invades Ukraine in 2022. On the other hand, there is a risk that geopolitical shocks could have a negative impact on growth, pushing the timing of interest rate cuts forward. Indeed, markets were clearly pricing in the possibility of a Fed rate cut on Friday. It rose from 24% to 30% by June, but has since returned to 24% this morning. But if higher oil prices lead to further inflation, with a second round of effects on other prices, that could have implications for monetary policy. Potential impacts can be bidirectional as they must remain in restricted areas longer. ”



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