July 6 - U.S. stock futures advanced on Monday, lifted by a stabilization in chip shares and a drop in crude oil that added momentum to a rally which had pushed the major equity indexes higher the prior week.
Oil remained pressured after OPEC+ agreed to raise output targets, and shipping through the Strait of Hormuz continued despite the absence of new progress in tense peace negotiations between Washington and Tehran. Brent crude futures fell 0.5% to $71.76 a barrel and hovered near four-month lows.
Last week the Dow finished Thursday at a record high during a holiday-shortened session, bringing it closer to the 53,000 mark, a level the index has never reached. The Dow, the S&P 500 and the Nasdaq Composite each rose about 2% over that period even as semiconductor stocks, which have been major drivers of market performance this year, showed signs of cooling.
Market breadth and sector dynamics
Traders noted that strength in healthcare, industrials and financials helped underpin the broader advance, suggesting the market rally could be expanding beyond the concentrated chip and AI-related trade. That sector diversification has offered some reassurance to investors amid the waning momentum for semiconductors.
In premarket trading on Monday, chip stocks regained ground. Memory-chip manufacturers Western Digital, Seagate and Micron Technology rose 5.5%, 4.4% and 3.4%, respectively.
Index futures were higher early in the session. At 05:37 a.m. ET, Dow E-minis were up 37 points, or 0.07%, S&P 500 E-minis had added 34 points, or 0.45%, and Nasdaq 100 E-minis gained 307.25 points, or 1.04%.
South Korea's SK Hynix is scheduled to list in the United States on Monday to raise roughly $28 billion, according to regulatory filings, providing another moment to assess investor demand for companies tied to artificial intelligence.
Federal Reserve focus and rate expectations
Monetary policy remained a central focus as the second half of the year began, with market participants reassessing the likely path for interest rates. After a cooler-than-expected jobs report, expectations for further rate increases eased slightly on Thursday.
Traders placed a 24% probability on a 25-basis-point hike at the Federal Reserve's July 29 meeting, down from about 30% a week earlier, according to the CME FedWatch tool. For September, markets were pricing in about a 44% chance of a quarter-point increase, compared with 48.3% a week earlier.
Hawkish positioning had risen following the Fed's meeting last month, the first under new Chair Kevin Warsh. Minutes from that meeting are scheduled for release on Wednesday and are expected to be examined for policymakers' perspectives on how energy prices could affect inflation and for any indications of disagreement among officials.
Events and economic data to watch
Second-quarter earnings season is set to accelerate later in July and will present another significant test for markets. Delta Air Lines and PepsiCo are anticipated to report later this week.
Several Fed officials are slated to speak this week. Fed Governor Christopher Waller will address an audience in Rome later in the session, and New York Fed President John Williams is expected to comment on Thursday. The Fed chair is due to testify before the House Financial Services Committee next week.
Economic releases are relatively light this week, with the ISM services survey due on Monday and expected to show a modest easing to 54.0, which would still indicate a healthy services sector and represent one of the few major data points in an otherwise quiet calendar.
Note on market tools
A market research tool highlighted the question of whether now is the time to buy MU, noting it evaluates MU monthly against thousands of alternatives using more than 100 financial metrics. The tool cited that it previously identified Siemens Energy (+231.5%) and Sandisk (+189%) ahead of broader recognition, and posed the question of whether MU could follow a similar path or if better opportunities exist within the sector.