Futures for US stock market indices fell on Wednesday, mainly pressured by losses in technology stocks following disappointing results such as Alphabet, which owns Google, as well as trade tensions between the United States and China.
Dow Jones futures fell by around 80 points, 0.2%, S&P 500 futures decreased by around 30 points, 0.5%, and Nasdaq 100 futures fell by around 195 points, 0.9%.
Wall Street indexes ended Tuesday’s session on a high, supported in part by hopes that US President Donald Trump’s decision to delay tariffs on both Mexico and Canada would signal a likely flexibility in his negotiating stance with China.
The S&P 500 rose 0.7%, the NASDAQ Composite gained 1.4% and the Dow Jones Industrial Average was up 0.3%.
Alphabet plummets as fourth-quarter earnings disappoint
However, this positive tone does not seem to have lasted long, as confidence has been hit after Alphabet (GOOGL) fourth-quarter revenue fell short of estimates, mainly due to disappointing profits from its cloud division, which is strongly linked to Artificial Intelligence.
The search giant said it plans to spend nearly $75 billion on developing its artificial intelligence capabilities this year, well above the $58 billion in capital expenditures estimated by analysts.
Wall Street’s AI spending has come under increased scrutiny in recent weeks, especially with the launch of China’s DeepSeek R1 AI model, which was showing signs of performance on a considerably smaller budget. This led to a massive drop in tech valuations the week before, which Wall Street is still struggling to recover from, with Alphabet trading more than 7% down ahead of the open.
Apple (AAPL) shares also fell ahead of the market opening after Bloomberg revealed that Chinese regulators are considering starting a formal investigation into the iPhone giant’s App Store fees and policies.
China could take action against Apple
The likely move by Beijing against the iPhone giant could be seen as a trade war with China, after Trump’s 10% tariffs against the country came into effect. Beijing retaliated with its own import tariffs and export controls, and also launched an antitrust investigation into Google.
Trump indicated that they are in no hurry to negotiate with Chinese President Xi Jinping and that tariffs will continue for the foreseeable future.
Analysts indicated that the increase in trade tariffs, which will be borne by US importers, could very well fuel inflation as well as putting pressure on growth.
More earnings in sight
More major earnings are due this week, including those of Uber (UBER), Walt Disney (DIS), Qualcomm (QCOM) and MicroStrategy (MSTR), scheduled for Wednesday.
Elsewhere, Snap (SNAP) shares rose ahead of the market open after the owner of Snapchat posted better-than-expected quarterly profits and upbeat forecasts thanks to stabilizing digital advertising spending.
Advanced Micro Devices (AMD) shares fell before the market opened after its data center revenues in the fourth quarter came in at $3.9 billion, below the consensus forecast of $4.15 billion.
Shares in Chipotle Mexican Grill (CMG) were down 6% in premarket trading after the burrito chain reported that same-store sales in the fourth quarter rose less than expected.
ADP employment data due
From an economic point of view, investors are eagerly awaiting the latest ADP private payrolls, prior to Friday’s closely watched non-farm payrolls report.
Data released on Tuesday indicated that job offers in the US fell more than expected in December, although recruitment remained resilient, in a probable sign of a slowly cooling labor market.
Crude oil falls as US inventories rise
Oil prices fell on Wednesday after higher-than-expected US crude oil inventory data raised concerns about consumption levels in the world’s largest consumer.
Crude oil reserves increased by just over 5 million barrels in the week ending January 31, according to data from the American Petroleum Institute, while gasoline inventories increased by a similar amount.
Official oil inventory data from the US government’s Energy Information Administration will be released at the end of the session.
