US Stock Market Rallies on Oil Retreat, Intel Shares Surge Up to 4%

US Stock Futures Rebound Amid Crude Oil Price Retreat

US stock futures bounced back on Tuesday, 5 May, as the decline in crude oil prices lifted market sentiment, with investors remaining optimistic that robust corporate earnings would continue to drive equities higher.

Futures tied to the S&P 500 rose 0.4%, while those linked to the Nasdaq 100 gained 0.6%. Dow Jones Industrial Average futures, meanwhile, advanced 0.3%. This rebound comes after the previous session, where all three major averages had closed lower, with the Dow falling 1% following the flare-up of violence in the Middle East, which injected fresh uncertainty into markets and overshadowed strong earnings from tech megacaps and gains in chipmakers.

The US and Iran exchanged fire in the Strait of Hormuz, raising uncertainty over the durability of the four-week ceasefire. The US military reportedly said it fired on Iranian forces and sank six small boats targeting civilian ships as it moved to reopen the Strait of Hormuz on Monday. The United Arab Emirates, a key American ally, said it had come under attack from Iran for the first time since a fragile ceasefire took hold in early April.

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The developments follow after Donald Trump warned on Sunday that Iranian efforts to halt passage through the strait "will, unfortunately, have to be dealt with forcefully." He described "Project Freedom" in humanitarian terms, designed to aid stranded seafarers on hundreds of ships that have remained stuck in the Persian Gulf since the war began.

As a net energy exporter, the US market has held up better than economies that rely heavily on imports, with the benchmark S&P 500 and the Nasdaq Composite touching record highs in recent days and erasing all war-driven losses. Today is set to be another busy day of corporate earnings, with companies such as Pfizer, KKR, and chip maker Advanced Micro Devices set to report results.

Investors now await the US Labor Department's latest Job Openings and Labor Turnover Survey, or JOLTS report, due later today.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Oil prices eased back after a sharp spike, even as renewed tensions threatened to upend the fragile truce in the Middle East. Brent crude futures slipped below $113 per barrel after rallying 4.4% in the previous session, while WTI crude futures fell below $104 per barrel after surging by a similar margin on Monday. Meanwhile, seven countries in the OPEC grouping agreed to raise production by 188,000 barrels per day following a virtual meeting held on Sunday. The output increase is aimed at offsetting the supply disruption caused by the blockage of the Strait of Hormuz, through which nearly one-fifth of the world's oil and natural gas trade typically passes.

US stocks in focus today include semiconductor names, with Intel climbing over 4%. Crypto-linked stocks also saw momentum as Bitcoin pushed higher, while AI-linked names remained in focus. According to Vested Finance, the cooling in oil is important because it takes some pressure off inflation fears that have been building over the past few weeks. Markets, it added, are still being pulled by two forces: strong earnings, especially from tech, continue to support the rally, while geopolitics and energy prices remain a constant risk.