U.S. stock index futures edged higher on Friday after a technology-led selloff in the previous session, as investors assessed fresh corporate earnings, rising geopolitical tensions in the Middle East and new tariffs announced by the Trump administration.
The S&P 500 and Nasdaq posted their steepest one day losses in a month on Thursday as enthusiasm surrounding artificial intelligence stocks weakened. Investors became increasingly cautious over mounting capital spending plans and rising cash burn among technology giants after earnings from Alphabet and Tesla raised fresh questions about the profitability of the AI boom.
Intel Earnings Offer Some Relief
Intel added to the week’s closely watched earnings releases, forecasting quarterly profit and revenue above Wall Street expectations while unveiling plans to increase investment over the next two years.
Its shares rose more than 5% in premarket trading, although the broader semiconductor sector remained under pressure as investors continued reassessing valuations across AI related companies.
Stay ahead of the geopolitical week.
MD Briefing delivers expert analysis across five global fronts — the Indo-Pacific, energy, geoeconomics, European security, and the Middle East — every Monday morning. Free.
Trump Announces New Tariffs
On the trade front, the Trump administration imposed new tariffs of 10% and 12.5% on goods from 60 trading partners, including the European Union and China, citing insufficient efforts to prevent imports made with forced labour. The measures replaced a temporary 10% global tariff that had expired.
Market participants largely viewed the announcement as less disruptive than earlier tariff rounds.
“Trump’s replacement tariffs were less shock and awe than the first ones,” Brian Jacobsen, chief economic strategist at Annex Wealth Management, said in a note.
“They weren’t a surprise, they’re lower than the first set of tariffs, and they have important carveouts to blunt the immediate effect on consumer prices. It’s business as usual.”
Middle East Tensions Lift Oil Prices
Geopolitical tensions also remained a major concern after President Donald Trump threatened “major military punishment” for Iran and its Houthi allies following attacks on two Saudi oil tankers in the Red Sea.
Oil prices climbed above $100 a barrel on Thursday as investors reassessed the risk of prolonged disruptions to global energy supplies. Although prices eased slightly on Friday, Brent crude remains nearly 40% higher this month, raising concerns that sustained energy inflation could complicate the Federal Reserve’s policy outlook.
Focus Turns to the Federal Reserve
Markets are now focused on next week’s Federal Reserve meeting, with traders pricing in roughly a one in three chance of an interest rate hike, according to CME’s FedWatch Tool.
Investors will also closely monitor the release of the Personal Consumption Expenditures (PCE) inflation data, the Fed’s preferred inflation gauge, due one day after the policy decision.
By 5:44 a.m. ET, Dow futures were up 275 points, or 0.53%, S&P 500 futures gained 0.29%, while Nasdaq 100 futures advanced 0.26%.
Despite Friday’s rebound, the S&P 500 and Nasdaq remain on track for a second consecutive weekly decline, while the Dow Jones Industrial Average is heading for a third straight week of losses.
Oracle Gains on Pentagon Contract
Among individual stocks, Oracle rose 3.2% after the Pentagon awarded the company a contract worth nearly $7 billion over as long as 10 years to consolidate the Defense Department’s on premises software licences under a single agreement.
Investors will also look to preliminary July Purchasing Managers’ Index (PMI) data later in the day for fresh insight into the health of the U.S. manufacturing and services sectors.
Analysis
Friday’s modest recovery suggests investors are not abandoning equities, but market sentiment has clearly become more cautious. The combination of softer confidence in AI driven technology stocks, renewed tariff measures and escalating geopolitical risks has shifted attention from growth opportunities to risk management. Next week’s Federal Reserve meeting and inflation data could determine whether markets stabilise or extend recent losses. At the same time, sustained high oil prices driven by Middle East tensions could revive inflationary pressures, making the Fed’s path on interest rates even more uncertain and increasing volatility across global financial markets.
With information from Reuters.
