U.S. Stock Futures Recover as Iran Peace Hopes, Falling Oil Prices Boost Sentiment
Key Takeaway: U.S. stock futures pointed to a higher open for the S&P 500 and the Nasdaq on Tuesday, recovering from the previous session’s selloff. Market sentiment was supported by reports of potential progress toward a peace deal between the United States and Iran, as well as a decline in crude oil prices and bond yields.
U.S.-Iran Relations and Oil Prices
Crude oil prices recovered from earlier lows after the U.S. military conducted strikes in southern Iran, which were described by U.S. officials as acts of self-defense. Reports of a possible U.S.-Iran peace deal have contributed to lower oil prices, which in turn supported stock futures.
Key Events This Week
- Salesforce and Costco are scheduled to report quarterly earnings.
- The Federal Reserve’s preferred inflation gauge is set to be released.
- The CNBC Investing Club will hold its May Monthly Meeting.
IPO Activity
- SpaceX’s share offering is described as well oversubscribed. Institutional orders are expected to conclude Wednesday after the market close, with retail orders to follow. Trading is scheduled to begin Friday. Underwriters Goldman Sachs and Morgan Stanley handled the deal, which aimed to discourage short-term flipping.
- OpenAI has confidentially filed for its initial public offering. The company announced an $852 million post-money valuation in March.
- Anthropic has finalized a $35 billion debt deal with Apollo Global Management and Blackstone. The company also filed IPO paperwork last week.
Corporate Debt and Investment
- Amazon issued $10 billion in Canadian dollar high-grade bonds, reported to be the largest corporate debt offering in that currency.
- China announced plans to spend $295 billion over five years to build AI data centers, aiming to create interconnected digital hubs across the country.
Mergers and Acquisitions
- GSK announced plans to acquire U.S. drugmaker Nuvalent for $10.6 billion. Following the announcement, Nuvalent shares rose nearly 39%.
Analyst Actions and Stock Movements
- TD Cowen raised its price target on Alphabet to $475 from $450, citing potential for rising estimates and increasing margins for Google Cloud.
- Goldman Sachs lowered Workday’s price target to $151 from $206, citing AI integration concerns.
- Barclays cut Chewy’s price target to $40 from $48 but maintained an overweight rating, citing improved profitability and customer spending.
- Evercore ISI raised its price target on Western Digital to $575 from $500.
- Bank of America raised Texas Instruments’ price target to $370 from $320.
- Melius Research analyst Ben Reitzes recommended Dell Technologies ahead of its earnings report, citing its advantage in AI infrastructure integration. Reitzes also rated Apple a buy ahead of its Worldwide Developers Conference.
- Intel’s stock has tripled to $120 per share year-to-date.
Apple Shares Decline After WWDC
Apple’s stock fell approximately 3% on Tuesday, adding to a near 2% decline the previous session following the company’s Worldwide Developers Conference keynote. The stock had rallied roughly 28% from March 30 to a record high close of $315 on June 2.
Multiple Wall Street firms maintained a positive outlook on Apple’s AI strategy. Morgan Stanley raised its price target to $360 from $330, citing a clearer path to monetization through hardware and services. The firm estimates that over 850 million iPhones currently in use cannot run basic Apple Intelligence features, presenting an opportunity for future upgrades. Melius Research noted that Siri AI and Visual Intelligence could drive future iPhone upgrades and recurring services revenue.
Earnings Previews
- UBS expects Micron to report earnings and revenue ahead of guidance due to better pricing. The firm maintained a buy rating and a $1,625 price target. Micron reports on June 24.
- Analyst Ben Reitzes rates Dell Technologies a buy ahead of its earnings report.
Other Observations
Jim Cramer stated that the pullback in Apple shares does not shake his conviction but noted the stock needs to settle after its recent rally. He characterized Apple as an incrementalist company and noted its developer conferences have historically been "sell the news" events. Cramer also highlighted Apple’s ecosystem of over 2.5 billion active devices and services revenue potential.
Cramer expressed confidence in the SpaceX IPO, citing the company’s diversified business lines including Starlink, compute contracts (Google pays SpaceX $920 million per month; Anthropic pays $1.25 billion per month), satellite launch business, and potential data centers in space. He noted the IPO sets a template for future offerings from OpenAI, Anthropic, and others.