Wall Street set for lower open as Alphabet and Tesla disappoint while oil prices climb: Dow Jones, S&P, Nasdaq, Futures
U.S. stock futures pointed lower on Thursday, with investors preparing for a weaker start to trading after disappointing reactions to earnings from Alphabet and Tesla combined with renewed geopolitical tensions pushed market sentiment lower.
Rising oil prices and concerns over the growing cost of artificial intelligence investment also added to pressure on equities.
Tech earnings weigh on investor sentiment
Shares of Alphabet (NASDAQ:GOOGL) fell more than 5% in premarket trading despite the Google parent reporting stronger-than-expected second-quarter results, as investors focused on the company’s higher capital expenditure plans.
Tesla (NASDAQ:TSLA) declined more than 7% before the opening bell after posting weaker-than-expected quarterly earnings alongside a sharp increase in AI-related spending.
The market response highlighted growing investor concerns about whether accelerating investment in artificial intelligence will deliver sufficient returns to justify current valuations.
Oil surge adds another headwind
Market sentiment was further weakened by a sharp rise in crude oil prices, with U.S. benchmark futures climbing more than 4% to trade above $90 a barrel.
Oil prices rallied after Yemen’s Houthi movement claimed responsibility for attacks on two Saudi oil tankers in the Red Sea, alleging they had violated the group’s maritime blockade.
President Donald Trump said on Truth Social that Iran would be held responsible if the attacks continued.
Investors assess geopolitical developments
The energy market remained supported by escalating tensions between the United States and Iran.
According to U.S. Central Command, American forces completed an eleventh consecutive night of strikes targeting Iranian military infrastructure, including operations centres, aircraft hangars, drone facilities and logistics assets designed to reduce threats to shipping through the Strait of Hormuz.
Secretary of State Marco Rubio reiterated that Washington remained open to diplomacy but questioned Tehran’s willingness to negotiate.
“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,” Rubio said.
President Trump also warned that the United States would respond forcefully to any attacks on shipping in the Strait of Hormuz.
Wall Street closes lower ahead of earnings
Wednesday’s trading session ended modestly lower after investors largely avoided making aggressive positions before major corporate earnings announcements.
The Nasdaq lost 146.30 points, or 0.6%, to close at 25,690.90, while the S&P 500 slipped 0.1% to 7,498.96. The Dow Jones Industrial Average edged down by just 6.06 points to finish at 52,218.58.
Market participants closely watched quarterly reports from Alphabet (NASDAQ:GOOGL), Tesla (NASDAQ:TSLA) and IBM (NYSE:IBM), with investors seeking fresh evidence that AI-driven spending continues to support long-term earnings growth.
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 continued, “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.”
Software and airlines lead declines
Software stocks were among the weakest performers, with the Dow Jones U.S. Software Index falling 2.5%.
Airline shares also came under pressure as higher fuel costs weighed on the sector, sending the NYSE Arca Airline Index down 1.8%.
Meanwhile, gold mining stocks outperformed as bullion prices strengthened, lifting the NYSE Arca Gold Bugs Index by 3.3%.
Computer hardware, utility and natural gas companies also posted gains, helping to cushion broader market losses.
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