US stock futures pointed higher on Tuesday, with Dow futures gaining 170 points (0.32%), while S&P 500 futures rose 0.12% and Nasdaq 100 futures advanced 0.14%. The move follows Monday's record close for the Nasdaq Composite, driven by a surge in AI-related stocks.
Investors are now balancing enthusiasm over Meta's Muse AI assistant against a retreat in oil prices, as Brent crude slipped below $100 on hopes that Iran could reopen the Strait of Hormuz. The 10-year Treasury yield eased about 2.4 basis points to 4.93%, providing some relief to growth stocks that have been pressured by elevated long-term yields.
AI stocks cool after Monday's surge
Monday's rally lifted Meta by 11.3%, AMD by nearly 10%, and Intel by more than 12%. AMD also crossed the $1 trillion market value threshold for the first time. However, premarket trading on Tuesday was more selective: Meta added about 0.5% and Alphabet rose 0.8%, while Nvidia slipped 0.2% and US-listed shares of TSMC and SK Hynix fell more than 1%.
Patrick Munnelly, strategist at Tickmill, told MarketWatch that investors still appear willing to take risk, but leadership is narrowing around AI. With central banks turning hawkish and long-term yields elevated, market breadth is becoming more important.
Oil below $100 gives bonds some relief
Brent crude fell to about $99.45 after reports that Iran could reopen the Strait of Hormuz within seven days if Washington eases military pressure. The strait normally handles close to one-fifth of global oil and LNG trade. The decline in oil helped push Treasury yields lower, with the 10-year yield down about 2.4 basis points to 4.93%.
Cboe's Mandy Xu noted to MarketWatch that the oil-yield correlation is near a 35-year high, making developments in Iran increasingly important for bond markets.
Meta's Muse remains the test for the AI trade
Muse has become more than a one-day catalyst. The assistant has topped Apple's US App Store, and Meta is working with Shopify to let users complete purchases through Muse. Truist analysts estimate Muse could add $28.5 billion in revenue by 2030. That helps explain why investors are treating consumer AI adoption as an earnings story rather than only a usage story.
AutoZone earnings put the consumer trade under scrutiny
AutoZone reports fiscal fourth-quarter results before the bell, with Wall Street looking for roughly $6.7 billion in revenue and earnings of about $54 a share. The stock is down roughly 31% over the past year. Oppenheimer recently cut its price target to $3,500 from $4,300 while maintaining an Outperform rating, according to Investing.com. Investors will focus on same-store sales, commercial growth, margins, and whether spending on stores and Mega Hubs is translating into stronger earnings.
ADP jobs data and Fed speakers could reset October odds
ADP's weekly private-employment estimate is due at 8:15 am ET, followed by New York Fed President John Williams at 10:05 am. For investors, the key signal will be whether stronger labour data pushes Treasury yields higher and strengthens expectations for another rate increase. Fed Vice Chair Philip Jefferson and Richmond Fed President Thomas Barkin are also scheduled to speak later.
Markets currently put the chance of at least another 25-basis-point hike in October at 57.6%. Firm labour demand could reinforce expectations that the Fed is not finished tightening.
This article is for informational purposes only and does not constitute financial advice.
