U.S. stock futures showed little movement Thursday as investors digested rumors of potential trade agreements alongside quarterly earnings from major companies. Alphabet (NASDAQ:GOOGL) posted strong revenue growth driven by its search and cloud divisions, with the tech giant planning hefty capital investments this year to fuel its artificial intelligence ambitions. Meanwhile, Tesla (NASDAQ:TSLA) shares declined following disappointing auto sales that pressured its net income. Market participants also awaited key U.S. business activity data and the European Central Bank’s upcoming interest rate announcement.
Mixed Movements in Futures
By 3:35 a.m. ET, Dow futures were down 152 points (-0.3%), S&P 500 futures were unchanged, and Nasdaq 100 futures had edged up 51 points (+0.2%). After a strong rally on Wednesday, with the S&P 500 hitting its 12th record close this year and the Nasdaq Composite surpassing 21,000 for the first time, investors remain cautious.
The gains followed reports in the Financial Times that the U.S. and European Union were advancing toward a trade deal setting a 15% tariff floor on goods imported from the bloc. This came shortly after President Donald Trump announced a trade agreement with Japan, which also included a 15% import tariff for the U.S.
Analysts noted that these developments have helped alleviate persistent worries around Trump’s tariff policies as the August 1 deadline for elevated “reciprocal” tariffs approaches.
With about 25% of S&P 500 companies having reported Q2 earnings, results have generally exceeded expectations: 67% beat revenue estimates and 88% surpassed EPS forecasts.
Alphabet’s Revenue Climbs
Alphabet and Tesla led the batch of earnings released Wednesday after market close. Alphabet posted a 14% year-over-year jump in Q2 revenue to a record $96.4 billion, buoyed by strong performance in search and cloud computing.
However, the company’s heavy investment in AI tempered profitability. Alphabet is integrating AI into its search platform to compete with emerging rivals like OpenAI and Perplexity, while also leveraging AI to boost ad campaign effectiveness.
Advertising revenue grew 10.4% to $71.3 billion, and the core search segment expanded 11.7%. The cloud division delivered an impressive 32% sales increase to $13.6 billion.
Investors are watching closely to see how Alphabet will capitalize on its substantial AI spending. The company projects capital expenditures to rise 13% this year to about $85 billion, up from $52.5 billion in 2024.
Alphabet’s shares climbed over 2% in after-hours trading.
Tesla Warns of “Rough Quarters” Ahead
Tesla continues to focus on automation, aiming to develop self-driving cars and robotics as new revenue streams amid softening vehicle demand.
CEO Elon Musk acknowledged looming headwinds from the impending expiration of a federal EV tax credit. Speaking to analysts, he said, “I’m not saying we will, but we could — you know, Q4, Q1, maybe Q2, but once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I think I’d be surprised if Tesla’s economics are not very compelling.”
In an interview with the Wall Street Journal, Musk emphasized Tesla remains in the “early stages” of autonomous driving development.
Tesla’s overall revenue declined 12% to $22.5 billion, with net income falling to $1.17 billion from $1.4 billion a year prior. Shares dropped more than 4% in extended trading.
Focus on U.S. Economic Data and ECB Policy
Markets await the release of preliminary U.S. manufacturing and services purchasing managers’ indexes (PMIs) for July. Economists forecast a slight dip in manufacturing PMI to 52.7 from 52.9, while services PMI is expected to edge up to 53.0.
Readings above 50 signal expansion.
Despite uncertainty around Trump’s tariff measures, the U.S. economy shows resilience. The stock market has reached record levels, retail sales have beaten forecasts, and consumer sentiment has improved. Inflation fears tied to tariffs have not yet materialized, though analysts warn potential impacts could arise in coming months.
The European Central Bank is set to announce its next rate decision on July 24, with consensus pointing to a hold at 2%.
Following a 25-basis-point cut in June — the eighth reduction this year amid slowing inflation and weak eurozone growth — the ECB signaled a likely pause in July due to tariff-related uncertainties.
As Erste Group analysts noted, “[T]he ECB’s next steps will be heavily influenced by developments in the tariff dispute and its impact on growth expectations.”
On Wednesday, the Financial Times reported that an EU-U.S. trade deal would include a 15% tariff on European imports but also a mutual waiver of levies on certain products like spirits, medical devices, and aircraft. However, if no agreement is reached by August 1, the EU is prepared to enact retaliatory duties totaling up to €93 billion.
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