Wall Street is pointing to a moderately lower open Thursday as mixed quarterly results from two of the market’s biggest names weigh on sentiment alongside a sharp rise in oil prices.
Futures for the Dow Jones, S&P 500, and Nasdaq were all down around 0.3%, extending losses from the prior session.
The Nasdaq dropped 0.6% to 25,691 on Wednesday, while the S&P 500 fell 0.1% to 7,499 and the Dow finished essentially flat, shedding just six points to close at 52,219.
Alphabet Inc (NASDAQ: GOOG) reported stronger-than-expected revenue and earnings after the closing bell, with cloud revenue surging 82%, but the results were overshadowed by news the Google parent raised its planned capital expenditure to as much as $205 billion for the year.
Alphabet shares were down 4.1% in pre-market trading despite the headline earnings beat, as investors reacted poorly to the scale of the increased spending commitment.
Tesla Inc (NASDAQ: TSLA) shares fell 6.2% in pre-market trading after the electric vehicle maker reported its first quarter of negative free cash flow in more than two years, driven by surging operating costs.
European markets also declined, with Milan leading losses at 1.7% after semiconductor manufacturer STMicroelectronics (NYSE: STM) sold off sharply following weaker second-quarter earnings and soft third-quarter guidance that disappointed investors after a three-month rally.
WTI crude jumped 4.1% Thursday morning to above $90.65 a barrel, its highest level in six weeks, after US Central Command confirmed another round of strikes against Iran.
Henry Allen at Deutsche Bank noted that “strikes between the US and Iran show no sign of easing, and the Houthis said they targeted two oil tankers in the Red Sea yesterday, raising fears that the conflict is widening.”
Saudi Arabia has redirected oil exports to the Red Sea port of Yanbu, stoking fresh supply concerns and raising what analysts described as worries about a more prolonged stagflationary shock, with investors now pricing in higher inflation and a more hawkish path for central banks.
Fed futures are currently pricing in a 36% chance of an interest rate increase at next week’s meeting, a notable shift in expectations driven by the renewed geopolitical tensions in the Middle East.
The European Central Bank is expected to hold rates steady when it announces its latest policy decision later Thursday, offering little in the way of relief for global markets.
Before the opening bell, earnings are due from defense contractors RTX and Lockheed Martin, telecoms firms T-Mobile and Nokia, and major companies including Thermo Fisher, TotalEnergies, Blackstone, Freeport-McMoRan, Comcast, and Honeywell.
After the close, markets will turn their attention to results from Intel and SAP, as well as gold miner Newmont, rounding out a packed week of corporate reporting.
