U.S. stock index futures rose on Tuesday as traders held onto hopes of a de-escalation in the Middle East conflict, while awaiting March producer price data and a fresh round of corporate earnings. U.S. President Donald Trump said Iran had been in touch on Monday and wanted to make a deal, but said he would not sanction any agreement allowing Tehran to have a nuclear weapon.
However, even the faintest hope of an off-ramp was enough to encourage investors eager to latch on to any positive news.
At 04:44 a.m. ET, Dow e-minis rose 74 points, or 0.15%, U.S. S&P 500 E-minis climbed 14.5 points, or 0.21%, and Nasdaq 100 E-minis advanced 107.75 points, or 0.42%.
“Given the potential for further talks, investors remained hopeful that a de-escalation would be achieved, even as yesterday saw the U.S. blockade begin…,” analysts at Deutsche Bank said in a note. The U.S. military began a blockade of all maritime traffic entering or leaving Iranian ports and coastal areas after weekend talks between Washington and Tehran failed to reach a deal to end the war.
EARNINGS EYED FOR DIRECTION
A busy slate of quarterly earnings is also expected to provide cues on direction.
Financial heavyweights including JPMorgan Chase, Wells Fargo, Citigroup, BlackRock, and healthcare giant Johnson & Johnson are among the companies scheduled to report results on Tuesday.
“Despite a messier macro backdrop, we believe the earnings season begins from a constructive fundamental starting point,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial.
“The next few weeks of profit reports will likely need to confirm that earnings momentum is broad enough and guidance firm enough to support stock prices after a period of elevated volatility and, in some pockets, still above-average valuations.”
Wells Fargo shares slipped 0.8%, while Citi dipped 0.6% in premarket trading ahead of earnings. JPMorgan was flat, and BlackRock rose 0.6%. J&J was 0.6% lower.
A fresh reading of the producer price index is also awaited, days after separate data showed that U.S. consumer prices increased by the most in nearly 4 years in March, driven by a record jump in gasoline and diesel costs.
Later in the day, commentary from several Federal Reserve policymakers will be parsed for hints on how the central bank is assessing the impact of the U.S.-Iran war.
Chicago Fed President Austan Goolsbee, Boston Fed President Susan Collins, Fed Governor Michael Barr, Richmond Fed President Tom Barkin, and Philadelphia Fed President Anna Paulson are due to speak.
Elsewhere, United Airlines and American Airlines rose 1.5% and 4.3%, respectively. United Airlines CEO Scott Kirby pitched a potential merger with American Airlines to U.S. President Donald Trump in late February, two sources said, raising the prospect of an industry-reshaping deal likely to face significant regulatory hurdles.
