July 21 (Reuters) – U.S. stock index futures rose on Tuesday as renewed mediation efforts in the Middle East lifted sentiment, while investors looked ahead to corporate earnings that could prove pivotal for the AI market as it navigates ongoing pressures.
Markets were weighing mixed signals from the U.S.-Iran conflict after a senior Iranian official told Reuters on Monday that Tehran had received a proposal from mediators for a 10-day ceasefire.
Tensions in the nearly five-month-long war have widened in recent days, with Yemen’s Iran-aligned Houthis saying they would impose a naval blockade on Saudi Arabia, raising risks to global energy supplies and trade beyond the Gulf.
Yet Brent crude futures pulled back from a one-month high, as investors latched on to hopes of a resolution, though markets have seen similar optimism fade several times since the war began. [O/R]
The decline in oil prices helped lift equities, with recently battered semiconductor stocks leading premarket gains. The iShares Semiconductor ETF rose 3.8%.
“While shipping confidence and oil production may take longer than expected to be fully restored, we expect limited pass-through to core inflation, keeping central banks from tightening aggressively,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
“This means earnings growth should remain a key driver of the equity market.”
Lately, chip stocks have come under heavy pressure, as investors question whether this year’s powerful rally in the sector has gone too far.
The Philadelphia SE Semiconductor Index ended Friday more than 20% below its late-June record high, confirming a bear-market decline, though the index remains up about 66% for the year.
At 5:19 a.m. ET, Dow E-minis were up 189 points, or 0.36%, and S&P 500 E-minis were up 43 points, or 0.57%. Nasdaq 100 E-minis were up 415.75 points, or 1.44%.
Recent volatility in chip stocks, which later spread to the broader markets, pushed Wall Street’s main indexes to three straight sessions of losses despite an upbeat start to the second-quarter earnings season.
Investor focus this week will turn to results from Alphabet and Intel, which could help determine whether the AI trade has further room to run amid elevated profit expectations.
Adding to the uncertainty, President Donald Trump on Monday unveiled 50% tariffs on a wide range of imports from Canada, opening a potential new front in the global trade war. The U.S. administration said the move was in response to Canada’s treatment of American-made cars, alcohol and dairy goods.
Among individual stocks, Nebius rose 7.7% after Nvidia disclosed a 9.3% passive stake in the AI cloud firm.
(Reporting by Ragini Mathur in Bengaluru; Editing by Maju Samuel)
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