By Johann M Cherian and Shashwat Chauhan
Aug 4 (Reuters) - U.S. main stock indexes were set to open higher on Tuesday after strong forecasts from Caterpillar and Palantir reassured investors about AI-driven demand, while hopes for an imminent deal to end the Middle East conflict sent crude prices lower.
The benchmark S&P 500 is about 21 points from hitting its first record high since June, while the blue-chip Dow was set to hit a fresh all-time high at the open.
Palantir Technologies gained 16% in premarket
trading after raising its annual revenue forecast again, while chipmaker On Semiconductor added 7.6% after forecasting quarterly revenue above expectations.
Caterpillar, seen as a bellwether for the global industrial economy, gained 7.5% after raising its annual revenue growth forecast, benefiting from a buildout of AI data centers that has spurred demand for its power-generation and construction equipment.
Investors have been scrutinizing results from AI-linked companies this earnings season for signs that their billion-dollar investments are yielding returns. Strong results from AI leaders Microsoft and Amazon last week were a relief and have underpinned gains on Wall Street following a turbulent July.
"Momentum-driven sectors often overshoot in both directions. But it is important not to confuse a momentum unwind with a fundamental deterioration," said Brian Levitt, chief global market strategist at Invesco.
In geopolitics, crude prices fell over 2% to $81.7 per barrel after a Qatari official said efforts to secure a diplomatic resolution to the conflict were continuing, while U.S. Treasury Secretary Scott Bessent said a deal with Iran to reopen the Strait of Hormuz could come as soon as Tuesday or Wednesday.
At 8:33 a.m. ET, Dow E-minis were up 649 points, or 1.22%, and S&P 500 E-minis were up 26 points, or 0.34%. Nasdaq 100 E-minis were up 317 points, or 1.1%.
Among other AI-linked stocks, Micron added 4.6%, Nvidia rose almost 1.8% and Marvell climbed 8.2%.
Overall, this earnings season has so far been better than historical standards. Of the 304 companies in the S&P 500 that have reported second-quarter earnings as of Friday, 85.2% have beaten estimates, versus the long-term average of 67.5%.
Elon Musk's SpaceX will release its first earnings report since its public debut after markets close. The company's shares were up 2.2%.
Snap jumped 5.9% after beating second-quarter revenue estimates, thanks to increased advertising spending during the FIFA World Cup and stronger campaign activity from large advertisers in North America.
Shares of U.S. photonic firms Coherent and Lumentum added 13% each after Reuters reported the Trump administration is drafting a ban on U.S. imports of new models of Chinese data center components.
McDonald's was flat after reporting disappointing results, while Pfizer added 1% after its upbeat quarterly results.
ECONOMIC DATA
The focus later in the day will shift to economic data.
The Labor Department's Job Openings and Labor Turnover Survey, scheduled at 10 a.m. ET, is expected to show the economy created about 7.4 million jobs in June, lower than the 7.6 million in the month before.
Other reports on factory orders and trade for June, along with remarks by Kansas City Fed President Jeffrey Schmid, could also offer insights into the health of the economy.
Investors will parse the reports to also gauge the outlook for interest rates at a time when the U.S.-Iran standoff in the Middle East is keeping crude prices elevated, while the Federal Reserve has offered little guidance on monetary policy.
Traders see a 63.4% chance that the central bank will hike rates by at least 25 basis points when it meets next month, the CME FedWatch Tool showed.
(Reporting by Johann M Cherian and Shashwat Chauhan in Bengaluru; Additional reporting by Niket Nishant; Editing by Devika Syamnath and Maju Samuel)
