By ELAINE KURTENBACH and MICHELLE CHAPMAN, Business Writers
U.S. futures are climbing as oil prices ease ahead of a big week of corporate earnings and a rate decision by the U.S. Federal Reserve.
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Futures for the S&P 500 gained 0.2% Monday, while the Dow Jones Industrial Average added 0.4%. Nasdaq futures edged up 0.1%.
The war with Iran has squeezed the world’s oil supply, driving energy prices higher and fueling a sharp jump in the cost of everything from gasoline to food and clothes.
High-level delegations from Saudi Arabia, Pakistan and Turkey are in Tehran on Monday for meetings with Iranian authorities to try to avert renewed fighting between Iran and Israel and the United States, Iran’s Foreign Ministry said.
The talks are being held at a time of growing anxiety about a possible return to all-out war. Israeli and American leaders have been sharpening their threats ahead of elections in both countries, while Iranian leaders have remained defiant.
The price of Brent crude, the international standard, fell 1.6% to $109.95 a barrel on Monday. U.S. benchmark crude sank 2.2% to $101 a barrel.
On Friday, the price for a barrel of Brent crude rose 3.1% to settle at $116.72, its highest level since June 2022. It has surged from less than $97 since early October.
There are a number of economic indicators on the calendar this week, starting with consumer confidence on Tuesday, which is expected to decline. The Fed’s Open Market Committee will meet this will to make a call on interest rates. Most economists expect the committee to stand pat, but believe another rate hike is in the works for this year with inflation running hot.
On Thursday, the Fed’s preferred measure of inflation, the personal consumption expenditures index, is expected to show that inflation rose at a 3.7% rate in September, sharply above the Fed’s 2% target.
Investors will also get a first look at U.S. economic growth for the third quarter Thursday.
Several influential AI-related companies report their latest financial results this week, including Google’s parent, Alphabet, along with Microsoft and Amazon.
Market players are closely watching corporate earnings, looking for a better sense of whether their AI-related investments are paying off.
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“This week is less about broad conviction and more about proof. Big Tech now has to show that the spending binge still deserves the market’s faith,” Stephen Innes of SPI Asset Management said in a commentary.
“Investors want proof now. They want to know whether the billions going into the compute buildout are building a durable earnings machine or just a shinier version of the same old capex furnace,” he said.
Shares of neocloud companies dropped as Elon Musk confirmed in a social media post that SpaceX has closed on a $40 billion debt raise for a deal with a company run by Apollo Global Management to lease data center hardware and AI chips.
Musk said companies without access to revenue outside of AI data centers will see “see guppy-level death and consolidation.”
Neocloud companies are essentially cloud services for AI, leasing access, or data centers, to powerful chips and computing capacity needed for artificial intelligence.
Shares of CoreWeave dropped more than 5% before the market opened Monday. Iren declined more than 4%. Nebius Group’s stock fell 3.8%.
In Europe, Germany’s DAX surged 0.8% to 25,389.86, while the CAC 40 in Paris climbed 0.8% to 7,840.87. Britain’s FTSE 100 declined 0.5% to 10,670.58. Asian markets were mixed.
Shares of companies with ties to Latin America are sliding as Brazilian voters denied Latin America’s resurgent right its ultimate prize, snapping a streak of seven straight conservative presidential victories. There was a stunning triumph of leftist incumbent President Luiz Inácio Lula da Silva over Flávio Bolsonaro on Sunday.
Brewing and beverage company Ambev’s stock tumbled more than 12% in premarket trading Monday. Shares of Nu Holdings dropped more than 25%, while Vale’s stock fell 3%.
The dollar rose to 157.38 Japanese yen from 156.99 yen. The euro fell to $1.1201 from $1.1223.
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