U.S. stock futures moved lower ahead of Thursday’s opening bell as investors reacted to disappointing market responses to earnings from Alphabet and Tesla, while another sharp rise in oil prices added to concerns over inflation and corporate costs.
The combination of higher AI investment and escalating geopolitical tensions left traders adopting a more cautious stance.
Alphabet and Tesla drag technology sector lower
Alphabet (NASDAQ:GOOGL) dropped more than 5% in premarket trading even after reporting second-quarter earnings above analysts’ expectations, as investors focused on the company’s increased capital expenditure forecast.
Tesla (NASDAQ:TSLA) fell more than 7% after missing earnings estimates and reporting another significant increase in spending tied to its artificial intelligence strategy.
The results renewed concerns that soaring AI investment may take longer than expected to translate into meaningful financial returns.
Oil prices jump amid Middle East tensions
Crude oil extended its rally, with U.S. futures climbing above $90 a barrel after gaining more than 4%.
The move followed reports that Yemen’s Houthi rebels had attacked two Saudi oil tankers in the Red Sea, accusing them of breaching the group’s maritime blockade.
President Donald Trump warned on Truth Social that Iran would be held accountable if the attacks persisted.
Geopolitical risks remain in focus
Investors also continued to monitor the conflict involving the United States and Iran.
U.S. Central Command confirmed another round of strikes against Iranian military infrastructure, targeting operational facilities, drone storage sites, aircraft hangars and logistics assets linked to threats against commercial shipping in the Strait of Hormuz.
Secretary of State Marco Rubio said, “If they’re serious, we’re serious. If they’re not, then we will do what is necessary to protect our interests and also the interests of our allies.”
President Trump also reiterated that the United States would respond forcefully to attacks on vessels operating in the strategic waterway.
Previous session ends cautiously
Wall Street finished Wednesday modestly lower after a volatile session as investors waited for earnings from several major technology companies.
The Nasdaq closed down 0.6%, the S&P 500 slipped 0.1%, and the Dow Jones Industrial Average ended little changed.
Commenting on the outlook, Daniela Hathorn, Senior Market Analyst at Capital.com, said, “The key question is whether earnings can justify both elevated valuations and the scale of AI-related investment.”
She added, “Investors will be focused not only on headline revenue and profit, but also on cloud growth, AI monetisation, margins and capital-expenditure guidance.”
She also said, “Strong results could allow technology shares to remain resilient despite higher oil, while weaker guidance could expose the market’s dependence on a relatively narrow group of companies.”
Airlines fall while gold miners advance
Technology software companies and airline stocks were among the weakest performers as higher oil prices increased cost concerns.
Meanwhile, gold miners benefited from stronger precious metal prices, while gains in computer hardware, utility and natural gas shares helped moderate broader market declines.
Leave a Reply