US equity futures signalled heavy losses ahead of Friday’s opening bell as a fresh wave of selling in technology stocks combined with rising crude oil prices and renewed geopolitical tensions to undermine market confidence.
Nasdaq 100 futures fell 2.7%, extending the negative momentum that had already pushed Wall Street lower on Thursday. Intel (NASDAQ:INTC) plunged more than 25% in premarket trading, while Amazon (NASDAQ:AMZN) dropped almost 8% after both companies delivered financial updates that disappointed investors.
The market reaction reflected growing scrutiny of technology companies’ substantial capital expenditure commitments, particularly those associated with artificial intelligence.
Investors are increasingly looking beyond strong demand for AI services and infrastructure, focusing instead on whether that spending can produce sustainable improvements in revenue, profitability and free cash flow.
Meanwhile, oil prices climbed more than 2% following an attack on a tanker in the Strait of Hormuz, raising concerns about energy supplies and the potential for renewed military escalation involving Iran.
Technology Sector Faces Renewed Pressure After Earnings
Intel was among the biggest premarket casualties after its third-quarter earnings exceeded expectations but its fourth-quarter outlook fell short of analyst forecasts.
The disappointing guidance raised concerns about slowing personal computer demand and the outlook for semiconductor producers.
Amazon also came under significant selling pressure after reporting quarterly earnings and revenue below consensus estimates, alongside negative free cash flow.
The results reinforced investor concerns that the financial benefits of large-scale artificial intelligence investment may take longer to materialise than previously anticipated.
Daniela Hathorn, senior market analyst at Capital.com, said investors were demanding stronger evidence that AI expenditure was delivering measurable returns.
“Investors are sending an increasingly clear signal: robust demand for artificial intelligence is not enough on its own,” Hathorn said. “Businesses must show that major capital investments are producing lasting growth in revenue, profit margins and free cash flow.”
She added that the issue could remain a significant challenge for the Nasdaq because recent market gains have been heavily concentrated among a small number of large technology companies.
“That could continue to weigh heavily on the Nasdaq, especially given how much of the market’s recent advance has depended on a handful of technology stocks,” she said.
Middle East Tensions Push Crude Oil Higher
Oil markets reacted sharply to reports of an attack on a commercial tanker travelling through the Strait of Hormuz.
US crude futures advanced more than 2% after reports indicated that a small boat had attached two explosive devices to the vessel’s hull.
The identity of those responsible was not immediately known.
The incident renewed concerns about the security of shipping routes used to transport significant volumes of the world’s oil supplies.
Geopolitical risks increased further after The Wall Street Journal and Axios reported that a senior military commander had briefed President Donald Trump on potential military options for renewed large-scale operations against Iran.
The developments raised fears that further escalation could threaten energy infrastructure or disrupt commercial shipping in the region.
Higher crude prices also introduced an additional inflation risk at a time when investors were already assessing persistent price pressures in the US economy.
Energy Stocks Benefit as Chevron and Exxon Mobil Report Strong Profits
The rally in crude oil supported shares of major US energy producers.
Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM) advanced in premarket trading after reporting sharply higher third-quarter profits.
The companies’ earnings performances reinforced expectations that higher energy prices could provide additional support for the sector.
While rising oil prices can create challenges for transport companies, manufacturers and consumers, they may improve revenue prospects for oil producers.
The strength of energy stocks therefore contrasted with the steep declines affecting technology companies.
The divergence illustrated how investors were responding differently to the same economic and geopolitical developments depending on companies’ business models.
Wall Street Ends Thursday Lower as Alphabet Plunges
The negative futures followed a retreat across the major US stock indexes on Thursday.
The Nasdaq Composite lost 365.13 points, or 1.4%, finishing at 26,184.72 after gaining 2.3% over the previous three sessions.
The S&P 500 declined 23.59 points, or 0.3%, to 7,720.39, while the Dow Jones Industrial Average fell 132.54 points, also 0.3%, to 52,342.56.
Technology shares led the retreat as concerns about AI-related spending returned to the centre of market attention.
Alphabet (NASDAQ:GOOG) dropped 13.2% after the Google parent reported third-quarter revenue below analyst expectations and negative free cash flow.
The figures raised questions about the company’s cash expenditure and the returns being generated by its investment programme.
Danni Hewson, head of financial analysis at AJ Bell, said investors might have been more willing to overlook Alphabet’s substantial spending if its results had demonstrated stronger financial benefits.
“Alphabet’s rising cash consumption might have attracted less concern if the rest of its results had convinced investors that the spending was paying off, but its shares dropped around 13%, pulling numerous other major technology stocks lower,” Hewson said.
The negative reaction spread through semiconductor manufacturers, computer hardware companies and software developers.
Caterpillar Slides Despite Earnings Beat
Caterpillar (NYSE:CAT) was another notable decliner during Thursday’s session.
Shares of the construction equipment manufacturer fell 9.6%, despite the company reporting third-quarter earnings and revenue ahead of Wall Street forecasts.
The decline demonstrated that positive quarterly results were not necessarily sufficient to support share prices in the prevailing market environment.
Investors continued to weigh company-specific developments against broader concerns about valuations, economic conditions and future spending.
The selling pressure contributed to the weakness across major US indexes, although several sectors managed to advance.
PCE Inflation Accelerates in September
US inflation data released by the Commerce Department showed that price pressures increased in September, although the figures were consistent with economists’ expectations.
The headline personal consumption expenditures price index rose 0.5% month over month, compared with a 0.3% increase in August.
Annual PCE inflation accelerated from 3.4% to 3.6%.
Both readings matched market forecasts.
The core PCE index, which excludes food and energy, increased 0.3% in September, in line with expectations and an upwardly revised August reading.
On an annual basis, core inflation rose to 3.1% from 3.0%.
The figures indicated that inflation remained above levels consistent with the Federal Reserve’s longer-term price stability objective.
The PCE measure is closely followed by policymakers because it provides important information about underlying inflation trends.
A separate Commerce Department release showed that US economic growth exceeded forecasts in the third quarter of 2026.
The economic reports followed the Federal Reserve’s decision to maintain interest rates, leaving investors to assess the implications of resilient growth and persistent inflation for future monetary policy.
Housing and Healthcare Shares Buck the Downtrend
Despite the weakness in major indexes, several sectors posted substantial gains on Thursday.
Housing stocks were supported by declining Treasury yields, which can improve financing conditions for property purchases and construction activity.
The Philadelphia Housing Sector Index surged 3.8%.
Pharmaceutical companies also attracted buying interest following favourable earnings announcements.
The NYSE Arca Pharmaceutical Index climbed 3.4%, with Eli Lilly (NYSE:LLY) advancing 6.8% after reporting third-quarter results above analyst estimates.
The strong performance helped lift sentiment across the pharmaceutical industry.
Airlines, healthcare companies and commercial real estate stocks also recorded notable gains.
These advances demonstrated that investors were still rewarding positive company results and favourable sector developments, even as the wider market retreated.
Gold Miners and Technology Hardware Stocks Retreat
Gold mining shares moved sharply lower on Thursday as the price of the precious metal declined.
The NYSE Arca Gold Bugs Index dropped 3.2%.
The fall reflected concerns about the potential impact of weaker gold prices on mining companies’ revenue and profitability.
Technology-related industries also suffered broad declines.
Software companies, computer hardware manufacturers and semiconductor producers all faced selling pressure, contributing to the Nasdaq’s substantial loss.
The weakness highlighted the continuing influence of artificial intelligence investment concerns on technology valuations.
Investors appeared increasingly cautious about companies whose future growth expectations depend on large capital expenditure programmes.
Investors Brace for Further Volatility on Wall Street
US markets faced the prospect of another difficult session on Friday as technology earnings disappointments and geopolitical developments weighed on sentiment.
The 2.7% drop in Nasdaq 100 futures pointed to continued pressure on technology stocks, with Intel and Amazon among the most significant premarket decliners.
At the same time, rising oil prices following the Strait of Hormuz attack introduced additional uncertainty about inflation and global energy supplies.
Chevron and Exxon Mobil offered some support for energy shares following their strong quarterly results, while Thursday’s gains in housing and pharmaceutical stocks demonstrated that market performance remained uneven across sectors.
Investors will be monitoring forthcoming earnings announcements, inflation developments, oil market conditions and the evolving situation in the Middle East.
The key issue for technology stocks remains whether companies can demonstrate that their substantial AI investment commitments will produce sufficient improvements in revenue, margins and free cash flow.
Until clearer evidence emerges, concerns about investment returns could continue to influence the direction of the Nasdaq and the broader US equity market.
