Earnings dominated the narrative in the U.S. markets on Wednesday, with Alphabet, Tesla, and IBM reporting Q2 results.
- Alphabet’s shares declined amid a higher full-year capex outlook, while Tesla missed profit estimates and IBM trimmed its annual sales outlook.
- Meanwhile, conflict in the Middle East continued to escalate, dampening hopes for U.S.-Iran peace talks and fueling concerns about energy flow through the Strait of Hormuz.
- Oil prices climbed higher, with Brent crude prices soaring above $95 a barrel.
U.S. stock futures edged higher in overnight trading on Wednesday as investors looked past additional U.S. military strikes on Iranian targets and turned their attention to Big Tech earnings for signs that heavy AI spending is translating into stronger growth, after Alphabet Inc. (GOOG) kicked off the sector’s earnings season.
Markets are now awaiting results from Microsoft Corp. (MSFT), Meta Platforms Inc. (META), and Amazon.com Inc. (AMZN) for cues on whether AI investments are translating into strong results.
Nasdaq-100 futures gained 0.25%, Dow futures were up 0.09%, and S&P 500 futures rose 0.08% at 9:22 PM EDT. Among ETFs tracking benchmark indexes, the SPDR S&P 500 ETF (SPY), the Invesco QQQ Trust (QQQ), and the SPDR Dow Jones Industrial Average ETF Trust (DIA) all edged higher at the time of writing.
The iShares 20+ Year Treasury Bond ETF (TLT) was also up 0.07% amid ‘bearish’ sentiment.
How Did US Markets Fare On Wednesday?
U.S. stock markets ended lower on Wednesday as escalating tensions in the Middle East brought rising oil prices back into focus.
The Nasdaq Composite led the decline, losing about 140 points to close down 0.57%. The S&P 500 followed, ending the session 0.14% down, while the Dow Jones Industrial Average was largely flat.
| Index | Move | Close |
| Dow Jones Industrial Average | -0.01% | 52,218.58 |
| S&P 500 | -0.14% | 7,498.96 |
| Nasdaq Composite | -0.57% | 25,690.90 |
The VanEck Semiconductor ETF (SMH) posted modest gains, closing up 0.48%, while the iShares Semiconductor ETF (SOXX) closed 0.51% higher.
US Market Drivers
Earnings dominated the narrative in the U.S. markets on Wednesday. Google parent Alphabet’s shares declined despite posting better-than-expected second-quarter top-line results as a higher full-year capex outlook fueled fresh concerns over rising costs of AI investments.
Meanwhile, Tesla Inc. (TSLA) missed earnings estimates and International Business Machines Corp. (IBM) trimmed its annual sales outlook. All three stocks were in the red at close.
Gene Munster, managing partner and co-founder at Deepwater Asset Management, said higher capex spending is positive for the AI infrastructure trade. “The infrastructure trade is intact based on higher capex outlooks and margins have been under pressure. Overall, I still believe we’re in the 3rd inning,” he said in a post on X.
Ulrike Hoffmann-Burchardi from the UBS Chief Investment Office told Bloomberg that the firm remains constructive on AI’s growth story, “but we favor a more balanced exposure across the AI value chain — from semiconductors and hardware to megacap tech and more defensive areas of the industry,” adding that “Investors should also ensure diversification beyond AI.”
Over the following weeks, results from the remaining “Magnificent Seven” companies and other marquee technology names will drive trends.
Markets are also tuned into geopolitical developments as rising conflict in the Middle East dampened hopes for U.S.-Iran peace talks, fueling concerns about energy flow through the Strait of Hormuz.
U.S. President Donald Trump threatened dire consequences for Iran if the country disrupted the critical waterway. “From this point forward, any time the Islamic Republic of Iran shoots at a ship in the Strait of Hormuz, whether it be by Missile, Rocket, Drone, or any other device or weapon, the United States will bomb and destroy ONE BRIDGE OR POWER PLANT, including those located next to, or in, the Capital City of Tehran,” he said in a post on Truth Social.
The U.S. Central Command confirmed continued attacks on Iran to “degrade” its ability to “threaten civilian mariners and commercial vessels transiting regional waters,” in a post on X. Oil prices soared amid the conflict.
Meanwhile, Yemen’s Houthis announced a maritime blockade targeting Saudi Arabia through the Bab el-Mandeb Strait, adding to global energy supply disruptions already caused by the closure of the Strait of Hormuz amid the U.S.-Iran conflict.
Mohamed El-Erian, chief economic adviser at Allianz, highlighted that additional disruption would further destabilize oil shipments and pressurize prices. In a post on X, the economist said, “Roughly 12% of global trade flows through the Red Sea, carrying a significant variety of goods. Also, a second simultaneous weaponization of a maritime chokepoint carries its own potentially damaging demonstration effect.”
Trending Stocks To Watch
Tesla Inc. (TSLA): Shares of the EV-maker fell nearly 4% in extended trading hours after it posted a significant second-quarter (Q2) profit miss alongside a revenue beat. Tesla also said that its capex will continue to rise over the next two to three years amid plans to scale its AI and robotics ventures.
Alphabet Inc. (GOOG, GOOGL): The big tech firm’s shares also slipped more than 2.6% overnight after it reported Q2 results and hiked its full-year capex outlook to up to $205 billion, overshadowing top-line beats.
ServiceNow Inc. (NOW): Shares of the enterprise software company gained more than 5% in extended trading hours after the company exceeded its second-quarter guidance and lifted its full-year subscription revenue outlook.
Nokia Corp. (NOK): The Finnish telecommunications giant was on the retail radar ahead of its Q2 earnings expected on Thursday.
Global Market Trends
Crude oil prices surged higher late Wednesday, with Brent crude futures expiring in September up nearly 2% to $95.86 per barrel at the time of writing. Meanwhile, WTI crude futures expiring in September were up 1.54% at $88.17 per barrel.
Yields on the 10-year Treasury were at 4.655% at the time of writing, while spot gold prices rose to $4,137.19 per ounce.
Meanwhile, Asian markets were trading higher at the open on Thursday, with South Korea’s KOSPI leading the gains. Japan’s Nikkei 225, China’s SSE Composite and Australian stocks were also gaining at the open.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<