U.S. stock index futures moved modestly higher on Tuesday, pausing after recent volatility as earnings season presses on.

As of 09:35 ET, the Dow Jones Industrial Average was up 60 points (0.1%), while the S&P 500 and NASDAQ Composite each rose 0.1%.

Markets rebounded on Monday from last week’s sharp declines, which had been triggered by fresh tariff threats and weaker-than-expected U.S. jobs data.

Rate Cut Optimism Supports Markets

Investor sentiment has improved amid rising expectations for a Federal Reserve rate cut in September. The odds of a rate reduction next month have climbed to roughly 90%, up from 63% a week ago, according to CME FedWatch data.

President Donald Trump renewed trade tensions on Monday by threatening higher tariffs on Indian goods due to its purchases of Russian oil. Yet, the market shrugged this off, instead focusing on the potential for Fed stimulus following soft economic data.

On the economic front, attention turns Tuesday to the ISM non-manufacturing PMI, forecast to edge up to 51.5 in July from 50.8 in June. A reading above 50 signals expansion in the crucial services sector, which makes up more than two-thirds of the U.S. economy.

Meanwhile, the U.S. trade deficit shrank more than expected in June, narrowing by 16% to $60.2 billion from $71.7 billion in May. The drop, driven by a pullback in imports, outperformed economist forecasts of $62.6 billion.

Palantir Headlines Corporate Earnings

Earnings have generally come in strong, with upbeat guidance and relatively muted concerns over tariffs helping support equities.

Palantir Technologies (PLTR) surged after reporting its highest quarterly revenue since going public, fueled by increased demand for its AI-driven software from both governments and businesses. The company has benefited from the White House’s AI initiatives and the Pentagon’s interest in working with non-traditional tech vendors.

Other corporate highlights:

• Pfizer (PFE) gained after beating Q2 earnings and revenue estimates, and raising its full-year profit outlook.
• Marriott International (MAR) also climbed on better-than-expected Q2 earnings, despite trimming its full-year forecast due to reduced federal spending and softer business travel.
• Caterpillar (CAT), however, fell after reporting Q2 earnings that missed forecasts, even as revenue topped expectations.

Oil Prices Extend Declines

Crude prices slipped again Tuesday, extending losses following OPEC+‘s decision to boost output despite an uncertain demand backdrop.

As of 09:35 ET, Brent crude was down 1% at $68.10 per barrel, while WTI dropped 1.1% to $65.57. Both benchmarks posted their fourth straight session of losses on Monday, settling at their lowest levels in a week.

OPEC+ announced on Sunday it would increase production by 547,000 barrels per day in September, fully reversing previous cuts totaling 2.5 million bpd, or roughly 2.4% of global demand.

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