Wall Street was set to open higher on Tuesday as PepsiCo's quarterly report signaled a strong start to the U.S. corporate earnings season, overshadowing concerns over a possible escalation in trade wars.
PepsiCo's shares rose 2.4 percent in premarket trading after the company's quarterly revenue and profit topped analysts' estimates on strong sales in its Frito-Lay unit.
"The first major earnings report came out, and PepsiCo's earnings beat expectations and that's a good start for the market," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
"The trade conflict is far from over and could eventually have a very negative impact on equities, but for now it is taking a back seat only because we are entering into the earnings season."
Overall, S&P 500 companies are expected to post second-quarter profit growth of around 21 percent, slightly higher than what was forecast in April, according to Thomson Reuters data.
Wall Street has gained for three straight days on strong U.S. jobs data, mild inflation numbers and earnings optimism.
But, investors and analysts will parse quarterly reports to gauge the impact of China's tariffs, which are expected to hit a range of U.S. industrial sectors.
On Tuesday, China's commerce ministry raised "anti-dumping tariff rates" for some U.S.-made optical fiber products, effective July 11.
The U.S. small business confidence index fell 0.6 points to 107.2 in June, according to the National Federation of Independent Business. Cardillo said the "disappointing" report is another sign that the trade dispute is worrisome for corporate America.
At 8:50 a.m. ET, Dow e-minis were up 61 points, or 0.25 percent. S&P 500 e-minis were up 4 points, or 0.14 percent and Nasdaq 100 e-minis were up 9 points, or 0.12 percent.
Also helping the market was a jump in oil prices due to growing supply outages. Norway shut one oilfield due to a workers' strike and Libya said its output had more than halved. [O/R]
Tesla Inc rose 2.3 percent. The U.S. automaker signed agreements to open a plant in Shanghai with an annual capacity of 500,000 cars, local media reported.
Shares of Walgreens Boots Alliance dropped 1 percent after Evercore ISI cut its rating on the stock to "in line" from "outperform."
Rating downgrades on eBay, Chipotle Mexican Grill and Cerner also pulled shares of the three S&P 500 components down between 1.4 percent and 2.1 percent.