A two-day rally in the Nasdaq 100 has ended, with Nasdaq-100 futures down 0.6%. S&P 500 futures edged lower by 0.3%, whereas the Dow Jones Industrial Average futures were down 31 points.
Equity futures in the US witnessed slight declines on Wednesday, 22nd July, as traders were eagerly looking for the results of Alphabet’s earnings that would give them an indication as to how the large investments made by the tech sector in artificial intelligence are paying off.
The geopolitical unrest between the US and Iran also weighed on the minds of investors.
The Nasdaq 100 index had two days of rally; however, the Nasdaq-100 futures dropped by 0.6%. The S&P 500 futures declined by 0.3%, and the futures associated with the Dow Jones industrial average dropped by 31 points.
There was ongoing tension in the Middle East for the 11th day, with the US alleged to be executing new strikes against Iran, which is attacking Bahrain, Jordan, and Kuwait through missiles and drones.
Moreover, President Donald Trump also ruled out any negotiation with Iran in the immediate future and threatened wider military operations, which could involve an attack on the supposed nuclear plant at Pickaxe Mountain.
The blocking off of the Strait of Hormuz by Iran has led to an escalation of the US military operation with an aim of loosening Iranian hold over the strategic passage. Nonetheless, Iran continues to retain its hold on the strategically important passage.
Markets will soon start to focus on the beginning of the earnings reporting season for Big Tech companies, where AI hyperscalers will update investors about their capital expenditure plans.
Alphabet is set to release its quarterly results for June on Wednesday, while Microsoft, Meta Platforms, and Amazon will do the same next week.
With Google parent company Alphabet revealing that it expects to invest twice as much in capex between 2025 and this year, amounting to an increase from 2025 of up to $190 billion, it would be expected of investors to seek signs that such investments are already paying off. At the same time, firms developing worldwide AI infrastructure need elevated capex levels.
On the upcoming results, domestic broker Vested Finance commented that “the comments made by Alphabet on its investment in AI, cloud growth, and capex can impact sentiments throughout the whole tech industry. The attention will not be drawn only to Google’s results but also to the future results from Microsoft, Meta, Amazon, and Nvidia.”
However, Tesla is also expected to make an earnings announcement once the market closes. Analysts will be watching out for the company’s AI plans following the bad performance of its stock price all throughout the year.
Not like most other tech companies, greater capital spending and a more positive view on AI investments may be good for Tesla stock that has dropped 16% this year. International Business Machines (IBM) and Texas Instruments will report earnings after market close.
Brent Crude Oil Crosses US$ 95 Amid Heightened Tensions at Strait of Hormuz
In the light of rising tension between US-Iran in the Middle East, the price of crude oil stayed high, with the Brent crude oil futures rising by 5% to touch a level of $95.47 per barrel, which was a month-high. Similarly, US WTI crude oil futures climbed by 5% to $88.58 per barrel.
While the US and Iran are competing to establish their supremacy over the Strait of Hormuz, the passage for ships is still blocked through the region.
As the United States intensified its military actions against Iran, Houthi rebels, backed by Iran, in Yemen were reported to have issued threats to impose a blockade against Saudi Arabia’s ports.
