US stock index futures and major benchmarks edged higher on Tuesday, with the S&P 500 gaining modestly while Nasdaq-led strength outperformed. The rally was supported by gains in chip and AI infrastructure names and eased after a sharp overnight move in crude oil pulled bond yields lower following renewed Middle East signals around the Strait of Hormuz.
At the same time, market participants weighed a neutral read-through from US housing data and looked ahead to the next batch of earnings. Equity investors also continued to price a meaningful probability of a Federal Reserve rate hike at its mid-September meeting, while investors monitored oil and rates for clues about the inflation outlook.
Key takeaways
- Index performance: The S&P 500 rose about 0.10%, the Dow edged up about 0.05%, and the Nasdaq 100 gained roughly 0.15%.
- Catalyst: Chip and AI infrastructure stocks led gains as crude prices retreated from an overnight spike, helping weigh on bond yields.
- Rates link: The 10-year Treasury yield fell back from a one-week high after WTI gave up most of its early gains, shifting expectations around near-term inflation pressures.
- Earnings backdrop: The market leaned on expectations for strong second-quarter earnings growth, with Bloomberg Intelligence forecasting Q2 growth near 32% for the S&P 500.
- Implication: Oil-driven rate volatility and ongoing earnings surprises are likely to remain the main drivers for the broader tape.
What drove the move
Strength in semiconductor and AI infrastructure shares underpinned the broader market. Chip and equipment names moved higher, including ASML Holding and KLA Corp, along with a wider set of suppliers and semiconductor-related stocks that gained more than 1% to 4% in early trading.
Another key driver was the behavior in energy and rates. Crude oil initially jumped more than 2% overnight to a one-week high, a move that briefly pushed Treasury yields higher and revived concerns about inflation. However, yields reversed as WTI later relinquished much of that gain.
Oil’s volatility was tied to developments around the Strait of Hormuz. Bloomberg-referenced reporting cited signals from Pakistan that the US and Iran were close to an arrangement that could reopen the waterway, following earlier hardening of the US stance toward Iran. Al Jazeera also reported that talks between Oman and Iran to reopen the Strait had reached an advanced stage.
Market reaction: stocks, futures, and the rates link
US index futures indicated firmer trading into the day, with September E-mini S&P futures up about 0.12% and September E-mini Nasdaq futures up around 0.20%. The broader pattern suggested investors favored growth and technology exposure while keeping an eye on the bond market for signals about the inflation path.
In rates, the 10-year Treasury yield backed off from its one-week high after the crude selloff, declining by roughly 2 basis points to about 4.68%. The report noted that T-notes also saw short covering as WTI gave up most of its overnight advance, easing inflation expectations.
Outside the US, market moves were mixed. The Euro Stoxx 50 rose to a new all-time high, while China’s Shanghai Composite closed lower. Japan’s market was closed for a holiday, limiting cross-asset signals from that region.
Earnings and macro signals investors focused on
US economic data did not add much directional clarity. July existing home sales fell 1.7% month over month to 4.06 million, near the 4.05 million level expected by analysts, keeping the focus on company fundamentals rather than data-driven rate repricing.
Earnings expectations remained a primary bullish reference point. According to Bloomberg Intelligence, the S&P 500 was tracking for nearly 32% earnings growth in Q2, compared with about 23% projected growth. The same source attributed a large portion of the expected improvement to AI spending, with AI infrastructure names projected to contribute close to 60% of the S&P 500’s Q2 earnings-per-share growth.
In reported results so far, Bloomberg data showed that 85% of S&P 500 companies that had reported second-quarter earnings beat estimates. Individual stock reactions added to the narrative: Rapid7 shares jumped after raising full-year adjusted EPS guidance, while Jabil rose following a UBS upgrade to buy. Several other companies also traded higher on specific operational updates, including forecast improvements, design wins, or contract announcements.
Not all earnings news landed positively. ON Holding shares fell after reporting weaker-than-expected Q2 net sales, with the weakness spilling into broader consumer weakness through the Nike linkage noted in the report. Venture Global and Amentum also declined after their results and guidance diverged from consensus expectations.
Bigger picture: geopolitics, oil, and what to watch next
The day’s trading reinforced the market’s sensitivity to geopolitics through the oil channel and, in turn, to interest-rate expectations. With the Strait of Hormuz remaining a central risk point, any change in negotiations or renewed disruptions could quickly reprice crude and shift bond yields again.
Rates pricing also remains a key variable. The report said markets were pricing about a 51% chance of a 25 basis point rate hike at the next FOMC meeting on September 15–16. Investors also continued to track Treasury supply, including a scheduled week of 10-year note and Treasury bond auctions, and Europe’s upcoming ECB decision timing.
Looking ahead, traders will likely focus on the next wave of earnings reports and any additional US macro releases for confirmation on the inflation outlook. Energy headlines tied to the Middle East and continued movements in the Treasury curve are expected to remain the dominant near-term catalysts for both equity and bond markets.
