Stock futures are higher, completely reversing yesterday's drop with dip-buyers out in force as a fragile ceasefire between the US and Iran held after a day of clashes and sentiment is helped by a pullback in oil prices, with Brent crude futures down 1.4% as well as the US move to return 22 Iranian crew from a seized vessel. The conflict “might need to escalate in order to de-escalate,” making any market weakness a chance to add positions in stocks, according to JPMorgan strategists who said that today is shaping up to be an "Everything Rally." As of 8:00am ET, S&P 500 futures rise 0.3% while Nasdaq 100 contracts add 0.6%. In premarket trading, semis lead gains with Mag7 mostly higher. Cyclicals (ex-Energy) are outpacing Defensives, though healthcare is rallying. Bond yields are down 1-2bp with the 10Y yield dropping to 4.42% and the Dollar catching a bid. Commodities are seeing sales in Energy, precious metals retracing losses, and Ags mixed. US economic data calendar slate includes March trade balance (8:30am), April S&P Global US Services PMI (9:45am), April ISM services and March new home sales and JOLTS job openings (10am). Fed speaker slate includes Bowman (10am) and Barr (12:30pm)

In premarket trading, Mag 7 stocks are mostly higher (Amazon +0.6%, Microsoft +0.4%, Meta +0.2%, Alphabet +0.3%, Nvidia -0.01%, Tesla +0.3%, Apple -0.2%)

In other corporate news, Michael Burry said he sold his entire position in GameStop after it made an offer to buy eBay for about $56 billion, citing concerns about the debt the company could take on for an acquisition. In AI news, ServiceNow projected it would generate $30 billion of subscription revenue in 2030, attributing the strong outlook to traction from its AI products. OpenAI discussed spinning out the company’s robotics and consumer hardware divisions late last year, according to the WSJ. And OpenAI co-founder and President Greg Brockman testified that his stake is now worth almost $30 billion, prompting an attorney for Elon Musk to ask why he had not donated the bulk of his earnings to the ChatGPT maker’s nonprofit foundation.

Relative calm returned to the Persian Gulf on Tuesday after US and Iranian forces exchanged fire the day before and Tehran launched missiles and drones toward the United Arab Emirates. Investors also found reassurance in the fact that a diplomatic push to resolve the impasse continued. While the war in the Middle East may be rumbling on, but JPMorgan’s Mislav Matekja says there are big differences to the 2022 playbook: He doesn’t expect to see stagflation in 2H as wage growth is moving lower. At the same time, equities aren’t complacent beneath the surface, with market breadth still narrow.

Traders have also been cheered by the AI boom and earnings that are beating despite a “very high bar,” according to Deutsche Bank’s Binky Chadha. Stock purchases by the ultimate dip-buyer - Corporate America - are helping to underpin the equity market too. forecast from Advanced Micro Devices Inc. later on Tuesday will offer new evidence of whether the spending wave on artificial intelligence is sustainable.

“Earnings remain the fuel for the US rally,” Madison Faller, global strategist at JPMorgan Private Bank, told Bloomberg TV. “The next question is whether earnings strength can broaden beyond technology. Portfolios need more than just one sector carrying the market.”

Still, concern about the war is showing up in other assets. WTI remains stubbornly above $100, while Goldman Sachs analysts wrote that the “speed of depletion and supply losses in some regions and products are concerning,” highlighting naphtha, jet fuel and liquefied petroleum gas. Diamondback Energy said it’s boosting crude output in response to rising prices caused by the war.

Meanwhile,30-year Treasury yields remain a touch above 5% having hit the highest since July on Mondayon inflation fears and concerns about higher government borrowing estimates.

In tech, Apple has held exploratory discussions about using Intel and Samsung to produce the main processors for its devices in the US, a move that would offer a secondary option beyond longtime partner TSMC. Meta is working on a financing package for a data center in El Paso, Texas, that could total roughly $13 billion, while Alphabet is selling bonds in the euro market just months after its last megabond deal.

Monday’s flareup of violence in the Middle East has injected fresh uncertainty after strong earnings from tech megacaps and gains in chipmakers pushed equities to a succession of records. The violence erupted after President Donald Trump announced “Project Freedom,” which he described as a humanitarian effort to guide stranded neutral ships.

Source: ZeroHedge News