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Wall St futures ease as Big Tech results revive AI spending worries; oil jumps
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Wall St futures ease as Big Tech results revive AI spending worries; oil jumps
Jul 23, 2026 3:54 AM

July 23 (Reuters) - U.S. stock index futures dipped on Thursday as concerns over heavy AI spending resurfaced after the first batch of Big Tech earnings, while another jump in oil prices linked to the widening Middle East conflict weighed on sentiment.

Investors offered a downbeat reaction to earnings from Alphabet and Tesla, the first of the so-called "Magnificent Seven" megacap companies to report this season.

Alphabet posted its strongest-ever quarter of growth in its cloud computing business, but the results did little to reassure investors as attention shifted to its higher spending plans.

The Google parent's shares fell 3.9% in premarket trading.

Tesla dropped 5.8% after reporting negative free cash flow for the second quarter for the first time in more than two years.

"Alphabet and Tesla are showing two very different stages of the AI investment cycle," said Lale Akoner, global market strategist at eToro.

"Alphabet is beginning to show that connection. Tesla still needs to prove that its ambitious projects can move from technological promise to commercial returns."

Capital spending plans will remain in focus when other major technology companies report next week, as investors question whether the huge sums being poured into AI are translating into meaningful returns, and whether profit growth can justify elevated stock valuations.

Geopolitical concerns added to the pressure. After months of investor focus on the Strait of Hormuz, attention has shifted to the Red Sea, where Iranian-aligned Houthis, who control areas near the Bab el-Mandeb strait, have opened a new front in the Middle East crisis.

Brent crude futures rose to $98 a barrel, their highest level since early June. [O/R]

The surge in oil prices revived inflation worries, pushing interest-rate-sensitive 2-year Treasury yields to a 17-month high as traders increased bets on a Federal Reserve rate hike as early as next week. [US/]

Markets are now pricing in about a 35% chance of a 25-basis-point increase at the Fed's July meeting, up from 12% a week ago, according to CME's FedWatch tool. Expectations for a similar move in September stand at 55%.

At 5:37 a.m. ET, Dow E-minis were down 225 points, or 0.43%, and S&P 500 E-minis were down 29.25 points, or 0.39%. Nasdaq 100 E-minis were down 109 points, or 0.37%.

Chip stocks, which have recently hit a volatile patch, were mixed. Texas Instruments fell 5.2% despite forecasting quarterly revenue above estimates.

Health insurer Molina Healthcare tumbled 8.8% even after raising its annual profit forecast and posting stronger-than-expected second-quarter results.

ServiceNow jumped 8.1% after the enterprise software company raised its annual subscription revenue forecast for the second time.

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