US stock futures advance as strong AI-linked earnings continue

By Johann M Cherian and Shashwat Chauhan

Aug ‌4 (Reuters) - U.S. stock index ​futures rose on ​Tuesday after strong forecasts from Palantir and ON Semiconductor reassured investors about AI-driven demand, while Middle East developments and U.S. earnings were also in focus to gauge the health of corporate America.

Palantir Technologies gained 16% in ‌premarket trading after raising its annual revenue forecast again, while chipmaker On Semiconductor added 7.6% after forecasting ⁠quarterly revenue above expectations.

Caterpillar jumped 7.5% after the company, seen as a bellwether for the global industrial economy, reported a second-quarter profit that nearly doubled from ‌a year earlier.

Investors have been scrutinizing results ‌from AI-linked companies this earnings season for signs that their billion-dollar investments are yielding returns. Strong results from AI leaders Microsoft and Amazon last week were a relief and have underpinned gains on Wall Street following a turbulent July.

"Momentum-driven sectors often ​overshoot in both directions. But it is important not to confuse a momentum unwind with a fundamental deterioration," said Brian Levitt, chief global market strategist at Invesco.

The benchmark S&P 500 is about 21 points from hitting its first record high since ⁠June, while the blue-chip Dow closed at a record high on Monday for the first time since July.

At 6:56 a.m. ET, Dow E-minis were up 343 points, or 0.64%, ​S&P 500 E-minis were up 15.5 points, or 0.2%, and Nasdaq 100 E-minis were up 225 points, or 0.78%.

Other AI-linked stocks such as Micron added 3.5%, Nvidia rose almost 1% and Marvell climbed ​8.5%.

Overall, this earnings season has so far been better than historical standards. ‌Of the 304 companies in the S&P 500 that have reported second-quarter earnings as of Friday, 85.2% have beaten estimates, versus the long-term average of 67.5%.

Elon Musk's SpaceX will release its first earnings ⁠report since its public debut after markets close. Shares were up 1.3%.

Snap jumped 6.8% after beating second-quarter revenue estimates, thanks to increased advertising spending during the FIFA World Cup and stronger campaign activity from large advertisers in North America.

Shares of U.S. photonic firms Coherent and Lumentum added 11.8% and ⁠9.3%, respectively, after Reuters reported the Trump administration is drafting a ban on U.S. imports of new models of Chinese data center components.

ECONOMIC DATA

The focus ​later in the day will shift to economic data.

The Labor Department's Job Openings and Labor Turnover Survey, scheduled at 10 a.m. ET, is expected to show the economy created about 7.4 million jobs in June, lower than the 7.6 million in the month before.

Other reports on factory orders and ‌trade for June, along with remarks by Kansas City Fed President Jeffrey Schmid, could also offer insights on the health of the economy.

Investors will parse the reports to also gauge the outlook ‌for interest rates at a time when the U.S.-Iran standoff in the Middle East is keeping crude prices elevated, while the Federal Reserve has offered ⁠little guidance on monetary policy.

Traders see a 63.4% ‌chance that the central bank will hike ​rates by at least 25 basis points when it meets next month, the CME FedWatch Tool showed.

(Reporting by Johann M Cherian and Shashwat Chauhan in Bengaluru; Additional reporting by Niket Nishant; Editing by Devika Syamnath ‌and Maju Samuel)

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