US stock futures fell ahead of Wednesday’s session as rising oil prices, fueled by intensifying tensions in the Middle East, dampened investor sentiment. Futures on the Nasdaq 100, S&P 500 Index, and Dow Jones Industrial Average were down 0.71%, 0.29%, and 0.10%, respectively, at 5:52 a.m. EDT on July 22.
Oil prices jumped significantly, with Brent crude up 1.75% at $93.07 a barrel and West Texas Intermediate (WTI) crude surging 4.21% to $88.64 a barrel. This increase was attributed to concerns about potential disruptions to global oil supplies, following reports that US Secretary of State Marco Rubio stated Iran was not serious about peace talks and the US continued airstrikes on Iranian military targets for the eleventh consecutive night. Four oil tankers carrying Saudi crude to Asia reversed course in the Red Sea due to threats from Yemen's Iran-aligned Houthis, further exacerbating supply concerns and pushing Brent crude above $95 per barrel at one point.
Investors are closely watching the upcoming earnings reports from major tech companies, including Alphabet, Tesla, ServiceNow, IBM, AT&T, and Southwest Airlines, all scheduled to report after the market closes. For Alphabet, analysts polled by FactSet anticipate second-quarter profit to rise 25% to $2.88 per share, with revenue increasing 21% to $117.1 billion. Concerns exist regarding whether AI spending will show a clear return on investment. Tesla is expected to report earnings per share of $0.53, up 32.5% year-over-year, or potentially $0.55 on $27.71 billion in revenue, with automotive sales projected at $18.9 billion. Tesla's stock dropped 0.6% premarket. Analysts also noted that the AI euphoria that previously drove stocks to record highs was waning, increasing pressure on companies to justify their expenditures.
During Tuesday's regular trading session, major US indices rebounded after three days of losses, with the Nasdaq gaining 1.29%, the S&P 500 advancing 0.89%, and the Dow Jones Industrial Average up 0.74%, primarily driven by a strong rally in chip stocks. However, in early trading on Wednesday, chip stocks like Micron Technology and Nvidia dropped 1% and 0.3% respectively, dragging down the S&P 500 and Nasdaq 100, which lost about 1%. The 10-year Treasury yield stood at 4.63%, and spot gold prices traded around $4,116.34 per ounce.
