Nasdaq Futures Slip as Chip Rally Falters Ahead of Alphabet Earnings

September Nasdaq 100 E-Mini futures (NQU26) are down -0.52% this morning as a rally in chip stocks lost momentum ahead of earnings from AI hyperscaler Alphabet.

Chip and AI infrastructure stocks fell in pre-market trading as investors turned cautious ahead of Alphabet's results. The earnings report will arrive just as chipmakers, the S&P 500's biggest driver of 2026, are caught in a wave of intense volatility amid concerns that the pace of AI spending cannot be sustained. Against that backdrop, investors will closely watch Alphabet's guidance on artificial intelligence spending.

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Higher oil prices also weighed on sentiment. The price of WTI crude jumped over +3% on Wednesday as the U.S. and Iran downplayed the prospects for talks and disruptions to global supplies continued to grow. The U.S. military carried out an 11th consecutive day of strikes on Iran in an effort to weaken the country's ability to threaten commercial shipping in the Strait of Hormuz. Meanwhile, a threat by Yemen's Houthi militants to blockade Saudi Arabia has begun to materialize as at least two oil tankers made U-turns in the Red Sea, while Ukrainian attacks on Russian shipping in the Black Sea have disrupted operations at a key pipeline there.

In yesterday's trading session, Wall Street's major indexes closed higher. Chip and AI infrastructure stocks rallied, with Sandisk (SNDK) jumping over +14% to lead gainers in the S&P 500 and Micron Technology (MU) surging more than +12%. Also, Nebius Group N.V. (NBIS) popped over +18% and was the top percentage gainer on the Nasdaq 100 after Nvidia disclosed a 9.3% passive stake in the neocloud operator. In addition, Coinbase Global (COIN) climbed more than +9% after a key hurdle facing the Clarity Act was reportedly cleared. On the bearish side, Danaher (DHR) tumbled about -11% and was the top percentage loser on the S&P 500 after the life sciences company issued below-consensus Q3 core revenue growth guidance.

"Investors are becoming more selective toward companies tied to artificial intelligence after strong gains. Profit growth still anchors the longer-term market outlook," according to Rob Haworth at U.S. Bank Asset Management.

Meanwhile, the Republican-controlled U.S. House of Representatives on Tuesday passed a short-term funding measure to prevent a possible government shutdown ahead of the November midterm elections by keeping federal agencies funded through December 4th. The bill now heads to the Senate.

In tariff news, U.S. President Donald Trump said on Tuesday that generic drug manufacturers will have to move production to the U.S. or face a 100% tariff starting in August 2028, rising to 200% one year later.

Second-quarter corporate earnings season rolls on, with all eyes today on Magnificent Seven stalwarts Alphabet (GOOGL) and Tesla (TSLA). The Google parent and the EV maker are scheduled to release their quarterly results after the bell, kicking off the megacap reporting season. Investors will look to Alphabet's earnings for updates on spending and semiconductors after a report said earlier this week that the company was developing a server chip designed to optimize its Gemini AI model. When it comes to Tesla, investors will be watching for details on how quickly CEO Elon Musk plans to expand the robotaxi service, as well as updates on the company's humanoid robot, Optimus. Prominent companies such as Texas Instruments (TXN), International Business Machines (IBM), GE Vernova (GEV), AT&T Inc. (T), and ServiceNow (NOW) are also set to report their quarterly figures today. According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +26% jump in quarterly earnings for Q2 compared to the previous year.

On the economic data front, investors will focus on the EIA's weekly crude oil inventories report, which is set to be released in a couple of hours. Economists expect this figure to be -2 million barrels, compared to last week's value of -1.7 million barrels.

U.S. rate futures have priced in a 75.9% chance of no rate change and a 24.1% chance of a 25 basis point rate hike at next week's monetary policy meeting.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.64%, up +0.17%.

The Euro Stoxx 50 Index is up +0.28% this morning, supported by gains in energy stocks and some positive corporate news. Energy stocks led the gains on Wednesday as oil prices climbed amid mounting fears of further supply disruptions. At the same time, technology stocks fell as caution prevailed ahead of Alphabet's earnings. Data from the Office for National Statistics released on Wednesday showed that the U.K.'s annual inflation rate eased in June to its lowest level in more than a year as gasoline prices fell, increasing the likelihood that the Bank of England will keep its key interest rate unchanged next week. Meanwhile, Eurozone government bond yields rose on Wednesday as surging oil prices heightened the risk of elevated inflation and increased the likelihood that the European Central Bank will raise interest rates later this year. The ECB is widely expected to keep interest rates unchanged on Thursday, but may signal that further increases in borrowing costs are possible. In corporate news, Airbus SE (AIR.FP) climbed over +6% after the planemaker launched a 5 billion euro ($5.7 billion) share buyback program and announced new medium-term targets, including nearly doubling its profits by 2029. Also, Hiab (HIAB.H.DX) rose more than +8% after the load-handling equipment maker posted higher Q2 orders.

U.K. June CPI rose +0.1% m/m and +2.6% y/y, compared to expectations of +0.1% m/m and +2.7% y/y.

U.K. June Core CPI rose +2.6% y/y, stronger than expectations of +2.5% y/y.