By Tharuniyaa Lakshmi and Shashwat Chauhan
Oct 6 (Reuters) – The S&P 500 was poised to open near record highs on Tuesday, as Treasury yields eased from multi-year highs and oil prices fell, while investors looked forward to the upcoming quarterly earnings season.
The benchmark S&P 500 was just 0.6% away from all-time highs as of Monday’s close. A record high for the index would imply the bull market that began in October 2022 remains intact.
The tech-heavy Nasdaq closed at a record high on Monday, lifted by heavyweights Nvidia and Microsoft, as investors continued to bet on the AI boom that has pushed stock markets to record highs.
Most of the ‘Magnificent Seven’ stocks edged higher in premarket trading, with Meta, Tesla and Amazon.com all up. Apple was an outlier, with its stock down 0.1%.
Chip designer Nvidia climbed 1.1%, pushing the market valuation of the world’s most valuable company close to the $6 trillion mark.
Optimism around the AI trade and expectations of strong corporate earnings have helped US stocks outperform global peers over the past six months despite higher energy prices and a volatile summer for bond markets that fueled concerns about tighter monetary policy.
“The space that I think is being looked at as what’s going to do the best is information technology,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.
“The expectation for everybody else is pretty much lower except for energy. The higher energy prices are going to have a negative impact on consumer spending.”
The yield on 30-year Treasury bonds fell to 5.64%, having touched a 2002 high of 5.702% a day earlier, while the yield on the benchmark 10-year bond also dipped.
A softer-than-expected payrolls report last week eased expectations around rate hikes this year. Traders now see a 78% chance of the Federal Reserve holding interest rates steady this month, though a December rate hike remains largely priced in, according to the CME Group’s FedWatch tool.
On Tuesday, at least four Fed officials, including New York Fed President John Williams, are slated to deliver public remarks.
At 08:40 a.m. ET, Dow E-minis were up 268 points, or 0.52%, S&P 500 E-minis were up 31.75 points, or 0.41% and Nasdaq 100 E-minis were up 162.5 points, or 0.52%.
Oil prices, meanwhile, fell almost 2% as resilient Middle Eastern crude exports and a G7 emergency stockpile release eased supply concerns. An ETF tracking S&P 500 energy stocks slipped 1%.
The third-quarter earnings season will kick off next week. Analysts on average expect S&P 500 earnings to jump over 30% year over year in the quarter, thanks largely to AI-related stocks, according to LSEG data.
Chipmaker AMD climbed 1.6% after CEO Lisa Su said the company planned to substantially increase chip supply in 2027 to meet booming AI demand.
Option Care Health jumped 33.1% after drug distributor McKesson and private equity firm Clayton Dubilier & Rice agreed to buy the infusion therapy provider in a deal worth about $5.8 billion, including debt.
Constellation Energy gained 8.6% after Alphabet’s Google entered into a 3,590-megawatt power deal with the company.
(Reporting by Tharuniyaa Lakshmi and Shashwat Chauhan in Bengaluru; Editing by Maju Samuel and Shinjini Ganguli)
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