US futures slip as Alphabet, Tesla capex fears and Middle East tensions weigh on markets
Investors digest raised capital expenditure forecasts from Big Tech giants while geopolitical risks in the Red Sea push energy costs higher and dampen Federal Reserve rate cut expectations.
US stock futures declined on Thursday as market participants navigated a complex mix of corporate spending concerns and escalating geopolitical risks. The Dow Jones Industrial Average and S&P 500 futures both dropped approximately 0.3 per cent, while the tech-heavy Nasdaq-100 futures fell 0.4 per cent. The retreat follows a volatile session on Wednesday driven by a flurry of earnings reports from major technology firms.
Pressure on equities was led by declines in shares of Alphabet and Tesla, two of the so-called Magnificent Seven companies, after they reported results following Wednesday’s market close. Alphabet’s shares slipped nearly 5 per cent in premarket trading, despite the company posting strong quarterly fundamentals. Investors are closely scrutinising the return on investment regarding the tech giant’s raised capital expenditure outlook.
Alphabet increased its full-year capital expenditure forecast to a range of $195 billion to $205 billion, up from the previous guidance of $180 billion to $190 billion. Similarly, Tesla chief executive Elon Musk characterised 2026 as a “massive capex year” for the electric vehicle maker, highlighting planned investments in Optimus robots, robotaxis, and data centres. The collective rise in spending forecasts has sparked debate over the sustainability and profitability of such heavy capital outlays.
Simultaneously, energy markets reacted sharply to widening conflict in the Middle East. Iran-backed Houthis claimed attacks on tankers in the Red Sea, contributing to a surge in oil prices. Brent crude oil futures climbed to $97 per barrel, nearing the psychologically significant $100 mark, while West Texas Intermediate futures rose to $89 per barrel. The escalation has added a layer of inflationary pressure to an already cautious trading environment.
The spike in energy costs has had immediate repercussions for fixed income markets, with rising oil prices pushing 10-year and 30-year Treasury yields to their highest levels since May. Higher yields have dampened market expectations for Federal Reserve interest rate cuts this year, as policymakers face renewed inflation concerns. Investors are now looking ahead to data releases, including initial jobless claims at 8:30 a.m. ET, and further earnings updates from companies including Intel, T-Mobile US, and Lockheed Martin.
