Wall St futures ease as Big Tech results revive AI spending worries; oil jumps

• Alphabet's cloud results disappointed as investors focused on higher capital spending plans; Tesla dropped 6% after reporting its first profit decline in over two years
• Brent crude reached $98/barrel, the highest since early June, due to Iranian-aligned Houthi attacks opening a new front near the Bab el-Mandeb strait
• Market expectations for a 25-basis-point Fed rate hike jumped to 35% for July and 55% for September as 2-year Treasury yields hit a 17-month high

Market Summary: Wall Street Futures Decline on AI Spending Concerns and Oil Surge

U.S. stock index futures fell 0.3% across major indices (Dow, S&P 500, Nasdaq) on Thursday as Big Tech earnings sparked renewed concerns about artificial intelligence investment returns and surging oil prices reignited inflation fears.

Key Earnings Results:

Alphabet shares declined after reporting second-quarter results that, despite strong cloud computing growth, disappointed investors due to increased full-year capital expenditure guidance. Tesla dropped 6% after missing profit expectations for the first time in over two years. The mixed results from these "Magnificent Seven" members raised critical questions about whether massive AI spending will generate meaningful commercial returns and justify elevated valuations.

Market Movers:

• Texas Instruments fell 4% despite beating earnings expectations
• Lockheed Martin surged 5.4% after raising 2026 forecasts
• ServiceNow jumped 7% on increased annual subscription revenue guidance

Inflation and Policy Concerns:

Brent crude reached $98 per barrel—the highest since early June—driven by escalating Middle East tensions involving Iranian-aligned Houthis near the Bab el-Mandeb strait. The oil surge pushed 2-year Treasury yields to 17-month highs and dramatically shifted Federal Reserve rate expectations. Markets now price a 35% probability of a 25-basis-point rate hike at the July meeting (up from 12% one week ago), with September odds at 55%.

Looking Ahead:

Investors await weekly jobless claims data and upcoming earnings from other major tech companies, with capital spending plans remaining the central focus. The market faces dual pressures: uncertainty over AI investment payoffs and renewed inflation concerns from geopolitical tensions.