Tech earnings keep investors on edge
The Nasdaq led Wall Street lower with a mixed performance from technology stocks, as investors waited for key earnings reports to gauge the health of a market rally fed by enthusiasm for artificial intelligence.
The S&P 500 fell slightly and the Dow ended virtually unchanged as traders also monitored the latest Middle East hostilities, which led oil futures to settle at a six-week high, fanning inflation worries.
After months of gains that lifted the major indexes from their March lows, momentum has been wobbling with uneven trading in heavyweight semiconductor stocks and weakness in software companies.
The Philadelphia SE Semiconductor index ended up 0.4 per cent, recovering from early losses for its third straight session of gains after three days of losses that had confirmed it was in a bear market late last week.
Second-quarter results were due after the bell from Alphabet and Tesla, the first of the so-called "Magnificent Seven" megacap companies to report. Investors were hoping for fresh evidence that these companies' multibillion-dollar investments in AI are paying off.
AI spending faces fresh scrutiny
The Dow Jones Industrial Average fell 6.06 points, or 0.01 per cent, to 52,218.58, the S&P 500 lost 10.24 points, or 0.14 per cent, to 7,498.96 and the Nasdaq Composite lost 146.30 points, or 0.57 per cent, to 25,690.90. Trading was choppy in Alphabet, which closed down 1.5 per cent.
It will be under scrutiny after a delay in the launch of a model central to its AI ambitions. Texas Instruments lost ground in extended trading after finishing the regular session up one per cent before it issued its results and forecast current quarter revenue above expectations.
Oil prices add to market caution
The crowded earnings calendar leaves markets vulnerable to sharper swings this week, while geopolitical tensions added another layer of caution.
Crude oil futures recorded their highest settlement since June 11, up around three per cent on the day as Yemen's Iran-backed Houthi militia threatened shipping in the Red Sea, one of the world's most important energy chokepoints along with the Strait of Hormuz.
US President Donald Trump vowed on Wednesday to destroy an Iranian bridge or power plant every time Iran shoots at a ship in the strait.
The Federal Reserve is expected to keep interest rates steady for the rest of 2026, according to the median forecast in a Reuters poll of economists. Still, respondents said the risk of a rate hike remained elevated.
Traders are pricing in a roughly 66 per cent chance the Fed leaves rates unchanged at next week's meeting, CME Group's FedWatch tool showed.
Declining issues outnumbered advancers by a 1.26-to-1 ratio on the NYSE where there were 142 new highs and 161 new lows. On the Nasdaq, 1,665 stocks rose and 3,103 fell as decliningissues outnumbered advancers by a 1.86-to-1 ratio.
The S&P 500 posted 14 new 52-week highs and 2 new lows while the Nasdaq Composite recorded 45 new highs and 104 new lows. On US exchanges, trading volume was relatively light with 15.16 billion shares changing hands compared with the 19.05 billion moving average for the last 20 sessions.
