U.S. stock futures indicate a slightly weaker open on Thursday, suggesting markets could give back some ground following the strong gains recorded in the previous session.
Investors may look to lock in profits after Wednesday’s rally, which more than reversed the losses seen earlier in the week.
Both the Nasdaq and the S&P 500 climbed to fresh record closing highs, even as uncertainty surrounding the Middle East conflict continued to linger.
IBM slump weighs on sentiment
A sharp premarket decline in IBM Corp. (NYSE:IBM) is expected to drag on overall market sentiment, with the stock falling 7.8% ahead of the open.
The drop comes despite the company reporting first-quarter earnings that exceeded expectations, as it chose not to raise its full-year outlook.
Industrial group Honeywell (NASDAQ:HON) could also face pressure after beating Q1 estimates but issuing weaker-than-expected guidance for the second quarter.
Texas Instruments surges on upbeat outlook
In contrast, Texas Instruments (NASDAQ:TXN) jumped 9.6% in premarket trading after delivering better-than-expected quarterly results and issuing a positive outlook.
Wall Street rally lifts major indices
Stocks posted strong gains on Wednesday, fully offsetting declines from the prior two sessions. The move pushed both the Nasdaq and the S&P 500 to new record closes.
The Nasdaq climbed 397.60 points, or 1.6%, to 24,657.57, while the S&P 500 rose 73.89 points, or 1.1%, to 7,137.90.
The Dow Jones Industrial Average also ended higher, gaining 340.65 points, or 0.7%, to close at 49,490.03 after paring earlier gains.
Ceasefire extension fuels market rebound
The rally on Wall Street was largely driven by news that President Donald Trump extended the U.S. ceasefire with Iran.
Calling Iran’s government “seriously fractured,” Trump said in a post on Truth Social that the U.S. would delay any attack until Iranian leaders “come up with a unified proposal.”
However, he also stated that the U.S. military would continue enforcing a blockade on all maritime traffic to and from Iranian ports.
Tensions remain high despite ceasefire
Iran rejected the extension, calling it “meaningless,” and said the Strait of Hormuz would remain closed until the blockade is lifted.
Mahdi Mohammadi, adviser to Parliament Speaker Mohammad Bagher Ghalibaf, described the move as a tactic “to buy time for a surprise strike,” adding that the “losing side cannot dictate terms.”
Shortly after the ceasefire extension was announced, Iran’s Revolutionary Guard Navy said it had seized two container ships in the Strait of Hormuz for “maritime violations.”
The ongoing exchange between Washington and Tehran has added to uncertainty, although investors remain cautiously optimistic about a potential resolution.
Earnings optimism supports markets
Market participants are also encouraged by the strength of corporate earnings, with the reporting season off to a solid start.
“Investors appear to be focusing more on the direction of risk — whether things are improving or deteriorating — rather than the absolute level of geopolitical tension,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
“Earnings season is playing a key role in reinforcing this narrative,” she added. “Expectations for continued double-digit earnings growth remain intact, helping to justify elevated equity valuations even as macro risks persist.”
Sector performance mixed
Semiconductor stocks led gains, pushing the Philadelphia Semiconductor Index up 2.7% to a record close.
Software stocks also performed strongly, with the Dow Jones U.S. Software Index rising 2.3%.
Computer hardware, oil services, and gold stocks posted solid gains as well, while airline stocks moved lower.
United Airlines (NASDAQ:UAL) led declines in the sector, falling 5.6% after reporting better-than-expected earnings but issuing disappointing guidance.