Stock Index Futures Gain as Oil Prices Retreat, U.S. PMI Data in Focus

The price of WTI crude fell more than -3% on Friday, but ongoing tensions between the U.S. and Iran suggest that energy prices will remain elevated. U.S. Central Command said in a post on X that American forces completed the 13th straight night of strikes against Iran. President Donald Trump told Axios in an interview that he is considering a "massive attack" on Iran to pressure the country into negotiating a peace deal.

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Lower oil prices pushed Treasury yields down from this year's highs. The 10-year T-note yield fell one basis point to 4.69%.

Stock index futures were also supported by a mild rebound in most members of the Magnificent Seven in pre-market trading following yesterday's selloff. Also, Intel (INTC) climbed over +6% in pre-market trading after the chipmaker posted upbeat Q2 results and issued Q3 revenue guidance that smashed Wall Street estimates. However, Intel's earnings failed to revive the AI trade as most chipmakers fell in pre-market trading.

Market participants are now awaiting U.S. business activity data and a fresh batch of corporate earnings reports.

In yesterday's trading session, Wall Street's major indices closed sharply lower. Tesla (TSLA) tanked over -14% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the EV maker reported weaker-than-expected Q2 adjusted EPS, with a surge in spending leading to its first cash burn in two years. Also, Alphabet (GOOGL) sank more than -7% and was the top percentage loser on the Dow after the Google parent raised its full-year capital spending guidance to as much as $205 billion, overshadowing its stronger-than-expected Q2 results. In addition, Rollins (ROL) plunged over -9% after the pest control company posted weaker-than-expected Q2 adjusted EPS. On the bullish side, Allegion (ALLE) jumped over +10% and was among the top percentage gainers on the S&P 500 after the lock manufacturer and physical security company posted upbeat Q2 results and raised its full-year guidance.

The Labor Department's report on Thursday showed that the number of Americans filing for initial jobless claims in the past week unexpectedly fell by 22K to 187K. That marked the lowest number of initial claims since 1969. Economists had expected the figure to rise to 211K.

"The especially big drop in initial claims last week is hard to chalk up to any one factor with confidence. That subdued trend mostly reflects the modest layoff rate in the economy at large," said Oliver Allen at Pantheon Macroeconomics.

Meanwhile, the Trump administration imposed new tariffs of either 10% or 12.5% on 60 U.S. trading partners, replacing the 10% global levies that expired today. The duties were imposed under Section 301 of the Trade Act of 1974, which allows presidents to levy tariffs on countries that engage in unfair trade practices. The administration said the countries hit with new tariffs have failed to impose or effectively enforce bans on imports of goods made with forced labor. Countries with laws in place to combat forced labor were assigned a 10% tariff, while those without such statutes were assigned a 12.5% tariff. The rates under the new authority went into effect today at 12:01 a.m. New York time.

Today, investors will focus on preliminary U.S. purchasing managers' surveys for July, set to be released in a couple of hours. The surveys will offer a snapshot of how the economy has performed this month just as oil prices have surged again amid escalating tensions in the Middle East. Economists expect the July S&P Global Manufacturing PMI to be 54.4 and the S&P Global Services PMI to be 51.3, compared to the previous month's values of 53.9 and 51.2, respectively.

U.S. New Home Sales data will also be released today. Economists project June's new home sales to be 609K, compared to the May figure of 580K.

On the earnings front, notable companies such as American Express (AXP), NextEra Energy (NEE), Verizon Communications (VZ), and HCA Healthcare (HCA) are slated to release their quarterly results today. According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +26% jump in quarterly earnings for Q2 compared to the previous year.

Investors will then shift their attention to next week, which is set to be an exceptionally busy one. The Federal Reserve will announce its latest interest rate decision, four of the Magnificent Seven companies—Microsoft (MSFT), Meta Platforms (META), Apple (AAPL), and Amazon.com (AMZN)—will report earnings, and a wave of key economic data will be released, including the Fed's preferred inflation gauge.

U.S. rate futures have priced in a 70.6% chance of no rate change and a 29.4% chance of a 25 basis point rate hike at next week's FOMC meeting.

"Next week is a really big week, and it could be make-or-break in terms of where markets go next. There's an awful lot more nervousness now about capex, particularly when you're talking about AI and where the return on investment is coming," said Michael Hewson at iForex.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.69%, down -0.26%.