U.S. stock index futures declined on Thursday as market participants evaluated a slate of technology sector earnings and tracked increasing geopolitical strain in the Middle East, a dynamic that has pushed crude oil prices back above $98 a barrel.
At 08:38 ET (12:38 GMT), Nasdaq 100 futures were the weakest, down 1.2%. S&P 500 futures slipped 0.8%, and Dow futures fell 0.9%.
Major U.S. benchmarks had ended the prior session lower, with technology names under pressure amid ongoing concerns that valuations tied to artificial intelligence expectations may be overstretched.
Alphabet and Tesla drive tech weakness after earnings
Alphabet, the parent of Google, surprised markets by increasing its annual capital expenditure guidance, stoking fears that AI-related spending could push the company further into negative free cash flow. The company said it now expects to spend as much as $205 billion on the infrastructure needed to support its AI strategy, up from an earlier estimate of $190 billion.
Alphabet's Class A shares fell more than 5% in premarket trading.
Tesla Inc. also weighed on market sentiment, dropping 7.5% before the opening bell. The automaker reported negative free cash flow as it accelerates investments tied to AI and robotics. Tesla's spending rose to $5.8 billion in the second quarter. Speaking to investors, Elon Musk described the period as "a massive capex year," while maintaining that the outlays are intended to ultimately "yield incredible returns."
Other earnings to watch
Additional corporate results slated for Thursday include a high-profile report from chipmaker Intel. Analysts expect Intel's earnings to have improved from the prior year as demand from the AI sector strengthens. Traders will be watching to see whether Intel - which has trailed some rivals in capitalizing on AI demand in recent years - has begun to close that gap in 2026.
Government support has underpinned a major turnaround plan at Intel, with a new advanced chip platform central to the company’s strategy.
Defense contractors RTX and Lockheed Martin, as well as mining companies Freeport-McMoRan and Newmont Goldcorp, are also due to report earnings on Thursday.
Middle East tensions lift oil and pressure markets
Heightened caution also centered on developments in the Middle East, where fighting between the United States and Iran has shown few signs of easing. Market participants expressed concern the hostilities could broaden across the Gulf and further interrupt oil flows from the region.
Tehran-backed Houthi forces in Yemen said they carried out strikes on two Saudi tankers in the Red Sea; the attacks are the first since the militia announced a blockade on Saudi vessels earlier this week.
Against this backdrop, Brent crude - the global benchmark - was last up 4.3% at $98.17 a barrel, while U.S. West Texas Intermediate futures rose 3.6% to $89.92 a barrel.
U.S. government bond yields have climbed toward their highest levels of the year, reflecting investor concern that the Federal Reserve could be forced to respond to a potential energy-driven inflation surge by tightening monetary policy further.
This report contains the reported figures and company commentary released with the earnings and market updates. Additional reporting contributions were provided by other journalists.