FINWIRES · TerminalLIVE
FINWIRES

Heavy AI Expenses Weigh on Wall Street Pre-Bell; Asia Up, Europe Off

By

Wall Street futures pointed moderately lower pre-bell Thursday on refreshed concerns that the AI-related capital spending tsunami could undercut profits in the tech sector.

Alphabet (GOOG, GOOGL) fell 3.8% pre-bell after the Google parent overnight reported strong Q2 results, but also up to $205 billion of planned AI-related capital outlays this year.

In the futures, the S&P 500 fell 0.2%, the Nasdaq declined 0.3%, and the Dow Jones was off 0.3%.

Traders also mulled West Texas Intermediate crude oil prices, up 4.2% to $90.49 in morning hours, due in part to ongoing Persian Gulf hostilities.

Asian exchanges traded mostly higher overnight on strength in semiconductor shares. European bourses tracked moderately lower midday on the continent.

Tesla (TSLA) traded down 5.7% pre-bell after the EV maker reported Q2 earnings that missed expectations, and noted heavy capital outlays, late Wednesday.

Lockheed Martin (LMT) gained 6.6% pre-bell after the defense giant reported Q2 earnings and revenue above outlooks, and boosted guidance, before the market open.

On the economic calendar is the weekly jobless claims report at 8:30 am ET, along with the Chicago Fed National Activity Index for June.

The weekly EIA natural gas report logs at 10:30 am, and the Kansas City Fed Manufacturing Index for July at 11 am.

In premarket action, Bitcoin traded at $65,735, and 10-year US Treasuries offered 4.67%. Spot gold commanded $4,088 an ounce.

Related Articles

Asia Markets

Update: US Equity Indexes Fall as Treasury Yields, Crude Oil Gains Reflect Concern Over Widening Disruption to Energy Supplies

(Updates with index/price moves and company/geopolitical news from the first paragraph.)US equity indexes fell on Wednesday as government bond yields followed crude oil prices higher amid concern that disruption to energy supplies is likely to both extend and expand in the Middle East.The Nasdaq Composite declined 0.6% to 25,690.90, with the S&P 500 down 0.1% to 7,498.96, while the Dow Jones Industrial Average leaned slightly lower to 52,218.58. Communication services and consumer discretionary led decliners while utilities and energy topped the gainers.Alphabet (GOOG, GOOGL) and Tesla (TSLA), both a part of the so-called Magnificent-7 group of stocks with a significant index sway, reported after the bell on Wednesday.Alphabet reported Q2 earnings of $9.11 per diluted share, up from $2.31 a year earlier. Analysts polled by FactSet expected $2.88. Revenue for the three months ended June 30 was $119.80 billion, up from $96.43 billion a year earlier. Analysts expected $117.06 billion.Tesla reported Q2 adjusted earnings of $0.33 per diluted share, versus $0.40 a year ago. Analysts polled by FactSet expected $0.53. Sales for the quarter were $28.24 billion, up from $22.50 billion a year earlier. Analysts expected $26.42 billion.In geopolitical news, the US plans to destroy an Iranian bridge or power plant, including those in and around Tehran, every time it attacks ships in the Strait of Hormuz, President Donald Trump said in a social media post on Wednesday. US Central Command has struck Iran for 11 consecutive nights to degrade the Iran Revolutionary Guards Corps' ability to attack maritime traffic in the chokepoint to about a fifth of global crude oil and gas flows.Meanwhile, seven tankers have changed course in the Red Sea to avoid the Bab el-Mandeb Strait since the Houthis' threat on Tuesday to block Saudi oil exports, Reuters reported. The Iran-aligned Houthis have reportedly completed preparations to target vessels near the Bab el-Mandeb Strait, which connects the Red Sea to the Gulf of Aden and Arabian Sea. The Bab el-Mandeb Strait is an alternative route to the Strait of Hormuz, which remains effectively closed due to tensions between the US and Iran."Any aggression against Iran, including our infrastructure, will compel a powerful and decisive response," Iran's Foreign Minister Abbas Araghchi posted on X, formerly Twitter, on Wednesday. "Those who contribute to such aggression, whatever the kind of support, will also be considered as legitimate targets."The front-month US West Texas Intermediate climbed 2.5% to $86.41 a barrel, and global benchmark North Sea Brent jumped 3% to $93.75 a barrel.US Treasury yields rose, extending gains from Tuesday. The 10-year marched 3.1 basis points higher to 4.66%, its strongest level in a month. The two-year jumped 4.3 basis points to 4.3% after yields hit the highest in 52 weeks.Markets are pricing in a more hawkish path for central banks, with yields moving higher around the world as a result, a Deutsche Bank note said, referring to the recent moves in real yields.Next week, the probability of the Federal Reserve leaving its policy unchanged for July slumped to 66% from 89% a week ago, the CME FedWatch tool showed Wednesday. The likelihood of a pause continuing across September, October, and December also declined.In precious metal markets, gold futures jumped 1.5% to $4,136.1, and silver futures advanced 1.5% to $59.98.

Dow JonesNasdaq CompositeS&P 500$GOOG$GOOGL$TSLA
Asia Markets

Update: US Equity Indexes Mixed as Treasury Yields Jump With Crude Oil Amid Red Sea Chokepoint Disruption

(Updates with index/price moves and company/geopolitical news from the first paragraph.)US equity indexes traded mixed as government bond yields followed crude oil prices higher amid worsening Iran geopolitics and a disruption of maritime traffic in the Red Sea chokepoint.The Nasdaq Composite slipped less than 0.1% to 25,826.1 after midday Wednesday. The S&P 500 rose 0.1% to 7,519.5, and the Dow Jones Industrial Average climbed 0.3% to 52,369.4.In geopolitical news, the US will destroy an Iranian bridge or power plant, including those in and around Tehran, every time it attacks ships in the Strait of Hormuz, President Donald Trump said in a social media post on Wednesday.Iran's Islamic Revolutionary Guard Corps said it hit Jordan's King Faisal and Prince Hassan bases with missiles and drones, claiming to target US military equipment in response to recent American strikes, CNN reported. The US Central Command said Tuesday it struck Iran for the 11th consecutive evening.Seven tankers have changed course in the Red Sea to avoid the Bab el-Mandeb Strait since the Houthis' threat on Tuesday to block Saudi oil exports, Reuters reported. The Iran-aligned Houthis have reportedly completed preparations to target vessels near the Bab el-Mandeb Strait, which connects the Red Sea to the Gulf of Aden and Arabian Sea. The Bab el-Mandeb Strait is an alternative route to the Strait of Hormuz, which remains effectively closed due to tensions between the US and Iran.The front-month US West Texas Intermediate climbed 2.4% to $86.40 a barrel, and global benchmark North Sea Brent jumped 2.8% to $93.52 a barrel.US Treasury yields rose, extending gains from Tuesday. The 10-year marched 1.8 basis points higher to 4.65%, its strongest level in a month. The two-year jumped 3.7 basis points to 4.3% after yields hit the highest in 52 weeks.Markets are pricing in a more hawkish path for central banks, with yields moving higher around the world as a result, Jim Reid, global head of macro and thematic research at Deutsche Bank, said in a note Wednesday, referring to the recent moves in real yields. The US 30-year real yield at over 1.0 basis point reached a post-2008 high on Tuesday, he added.Next week, the probability of the Federal Reserve leaving its policy unchanged for July slumped to 66% from 89% a week ago, the CME FedWatch tool showed Wednesday. The likelihood of a pause continuing across September, October, and December also declined. The possibility of a Fed rate increase had surged earlier this month following soft consumer and producer price inflation data.Alphabet (GOOG, GOOGL) and Tesla (TSLA) will report quarterly earnings after the bell on Wednesday.Shares of Super Micro Computer (SMCI) soared 24% after the company said it expects fiscal Q4 GAAP and non-GAAP gross margins in the range of 15% to 17%, significantly above its 8.2% to 8.4% forecast due to a favorable customer and product mix. The stock was the top gainer on the S&P 500.In precious metal markets, gold futures jumped 2% to $4,159.3, and silver futures advanced 2.6% to $60.64.

Dow JonesNasdaq CompositeS&P 500$GOOG$GOOGL$SMCI$TSLA
Asia Markets

Exchange-Traded Funds, US Equities Mixed After Midday

Broad Market IndicatorsBroad-market exchange-traded fund IWM fell and IVV rose. Actively traded Invesco QQQ Trust (QQQ) eased 0.1%.US equity indexes traded mixed ahead of quarterly earnings from Alphabet (GOOG, GOOGL) and Tesla (TSLA) and as government bond yields followed crude oil prices higher amid worsening Iran geopolitics.EnergyIShares US Energy ETF (IYE) and the State Street Energy Select Sector SPDR (XLE) each added about 1.2%.TechnologyThe State Street Technology Select Sector SPDR ETF (XLK) rose fractionally; iShares US Technology ETF (IYW) shed less than 0.1%, and iShares Expanded Tech Sector ETF (IGM) was down 0.1%.The State Street SPDR S&P Semiconductor (XSD) rose 1%, and iShares Semiconductor (SOXX) advanced 1%.FinancialThe State Street Financial Select Sector SPDR (XLF) shed 0.1%. Direxion Daily Financial Bull 3X Shares (FAS) declined 0.3%, and its bearish counterpart, Direxion Daily Financial Bear 3X Shares (FAZ), advanced 0.3%.CommoditiesCrude oil rose 2.6%, and the United States Oil Fund (USO) added 2.4%. Natural gas gained 1.9%, and the United States Natural Gas Fund (UNG) was up 2.1%.Gold on Comex added 1.8%, and the State Street SPDR Gold Shares (GLD) gained 1.4%. Silver was up 2%, and iShares Silver Trust (SLV) climbed 2%.ConsumerThe State Street Consumer Staples Select Sector SPDR (XLP) added 0.5%. The Vanguard Consumer Staples ETF (VDC) gained 0.4%, and iShares Dow Jones US Consumer Goods (IYK) was up 0.9%.The State Street Consumer Discretionary Select Sector SPDR (XLY) slipped 0.5%. VanEck Retail ETF (RTH) dipped 0.7%, and the State Street SPDR S&P Retail (XRT) was up 0.4%.HealthcareThe State Street Health Care Select Sector SPDR (XLV) shed 0.3% and iShares US Healthcare (IYH) eased 0.3%, and Vanguard Health Care ETF (VHT) fell 0.5%. IShares Biotechnology ETF (IBB) was down 0.8%.IndustrialThe State Street Industrial Select Sector SPDR (XLI) added 0.4%. Vanguard Industrials Index Fund (VIS) and iShares US Industrials (IYJ) were higher as well.CryptocurrencyIn midday activity, bitcoin (BTC-USD) dipped 0.7%. Among cryptocurrency ETFs, ProShares Bitcoin ETF (BITO) fell 0.8%, ProShares Ether ETF (EETH) was up 1%, and ProShares Bitcoin & Ether Market Cap Weight ETF (BETH) was 0.1% higher.

Dow Jones^EEM^EXI^FAS^FAZ^GLD^IBB^IGM^IGV^IPK^IVV^IWMNasdaq Composite^IYE^IYH^IYJ^IYK^IYW^PMR^QQQ^RTH^SOXXS&P 500^SPY^UNG^USO^VDC^VHT^VIS^XLE^XLF^XLI^XLK^XLP^XLV^XRT^XSD$BETH$BITO$EETH