Stock market wavers as AI boom faces scrutiny and Iran tensions escalate oil prices

Wall St futures dip as traders assess AI boom, fresh Iran tensions By Investing.com

Investing.com - U.S. stock futures were hovering around both sides of the flatline on Tuesday, with investors assessing both the sustainability of the artificial intelligence boom and renewed Middle East tensions. Get premium Wall Street insights with InvestingPro - now 60% off By 06:01 ET (10:01 GMT), the Dow futures contract had risen by 120 points, or 0.2%, S&P 500 futures had dipped by 8 points, or 0.1%, and Nasdaq 100 futures had fallen by 262 points, or 0.9%. The main averages on Wall Street rose on Monday, pushing the Dow up above the 53,000 level for the first time. Driving sentiment was a jump in technology stocks, particularly chipmakers like Advanced Micro Devices and Western Digital. Broadcom also advanced on the news that it was partnering with iPhone-maker Apple to develop new custom chips. The Philadelphia semiconductor index, which tracks the chip sector, rebounded after a decline last week. Although debate has swirled around the sustainability of massive spending on AI, demand appears to remain robust for the high-end memory chips and data centers powering the nascent technology. Samsung Electronics provided further proof of this on Tuesday, when the South Korean firm unveiled preliminary quarterly operating profit which was almost 20 times higher than a year ago. Operating profit came in at 89.4 trillion won in the quarter ended in June, or around $58 billion, compared to 4.7 trillion in the corresponding quarter last year. The total also surpassed income generated in 2024 and 2025, combined. Still, Samsung's stock fell by more than 6% in Seoul trading, hinting at the sky-high expectations investors have for chip manufacturers and the broader AI boom. The tech sector is now grappling with "a fresh bout of doubt and pain this morning," analysts at Vital Knowledge said in a note. Shares of chip stocks globally sold off on Tuesday. "The reaction to Samsung speaks to one of the biggest risks facing markets over the coming weeks: Q2 earnings results are likely to be quite robust on an absolute basis [...], but unlike with the Q1 season, expectations are presently very bullish [...], which means the bar is quite elevated," the analysts wrote. Much of the focus this week is also on the publication on Wednesday of minutes from the Fed's June meeting. At the gathering, the central bank left interest rates unchanged at a range of 3.5% to 3.75%, although several officials projected that a borrowing cost hike may be coming this year. Meanwhile, new Fed Chair Kevin Warsh has stressed that he does not want the Fed to offer forward guidance on rates, but did note at an event last week that inflation risks have eased. The market is divided over the Fed's interest rate trajectory will follow with Warsh at helm of the Fed, analysts at Neuberger said. According to the CME FedWatch Tool, traders now see about a 56% chance of a rate hike as soon as September, down from 60% before the release of the employment figures. Oil prices have broadly retreated following an interim ceasefire deal between the U.S. and Iran in June, yet edged higher once again on Tuesday amid reports of new attacks on vessels in the Strait of Hormuz. Meanwhile, U.S. payrolls data last week was softer than anticipated. Beyond rates, investors will be keeping tabs on President Donald Trump's trip to Turkey for a NATO summit due to begin on Tuesday. Trump has been at odds with Washington's European allies, especially over the war in Iran. On Monday, Trump said the U.S. would either notch a long-term peace deal with Iran or "finish the job," suggesting that military options remain on the table as Iran adopt a defiant stance during the funeral of former Supreme Leader Ayatollah Ali Khamenei, who was killed by strikes at the beginning of the war in late February. Elsewhere, the quarterly corporate earnings season will gather pace this week, with Levi's Strauss & Co, PepsiCo (NASDAQ:PEP), and Delta Air Lines (NYSE:DAL) all slated to report. Investors will also be SpaceX's inclusion in the Nasdaq-100 on Tuesday, an event expected to generate elevated trading volumes alongside continued scrutiny of the AI sector's momentum.

Stocks falter on AI worries, oil spikes on Iran concerns

LONDON/WASHINGTON, July 7 (Reuters) - Global stocks fell on Tuesday as technology shares slid despite blockbuster results from Samsung Electronics, with investors remaining concerned about the sustainability of the AI-driven rally, while oil prices rose on renewed Middle East tensions. The tech-heavy Nasdaq Composite was down 0.97% in early trading Tuesday, while the S&P 500 slipped 0.32%. The Dow Jones Industrial Average was flat. Stocks took a step backwards despite Samsung Electronics forecasting a 19-fold jump in April-June operating profit to 89.4 trillion won ($58.4 billion), a third straight quarter of record operating profit for the world's largest memory-chipmaker. Rather than reassuring investors, the results triggered heavy selling in Samsung and rival SK Hynix shares, weighing on South Korea's Kospi and other technology-heavy Asian markets. Investors have increasingly questioned whether profit growth linked to artificial intelligence can be sustained if supply bottlenecks in key components such as memory chips ease. "This is a record for Samsung, but rather than placate the markets, these strong results have led to fears that the AI chip sales boom cannot be sustained," Kathleen Brooks, research director at XTB, said. Further weighing on markets was a Reuters report that Chinese startup DeepSeek was developing its own AI chip, which could reduce its reliance on other major chipmakers to train and run its AI models. SK Hynix is due to join the Nasdaq this week in a $28 billion listing, one of the world's largest new share sales, as the chipmaker seeks to capitalise on the AI boom. In Europe, where exposure to volatile AI-linked stocks is more limited, the STOXX 600 slipped 0.16%, as losses in semiconductor and tech stocks offset gains in oil and gas shares. Energy stocks got a lift from crude prices gaining on the back of signs that U.S.-Iran peace talks were losing momentum. MSCI's gauge of stocks across the globe was down 0.36%. Adding to market concerns, Iran's Revolutionary Guards fired at least two missiles at commercial ships transiting the Strait of Hormuz on Monday, Axios reported, citing two U.S. officials. The ships suffered significant damage, but there were no casualties, the report said. Brent crude futures rose about 1.9% to $73.37 a barrel. NATO MEETING SET TO START IN TURKEY U.S. President Donald Trump, who has pressed Europe to boost defence spending and clashed with European leaders over the Iran war and Greenland, is due to attend a NATO meeting in Turkey beginning on Tuesday. Trump said on Monday the U.S. would either reach a deal with Iran or "finish the job," renewing his threat of military action as Tehran projects defiance following the funeral of Supreme Leader Ayatollah Ali Khamenei. In currency markets, the dollar index, which tracks the U.S. currency against six others, was little changed at 100.87. The yen clawed above 40-year lows to trade a touch stronger on the day at 161.9 to the dollar. Traders were alert for intervention given signs of a possible shift in strategy by Japanese authorities. The yield on benchmark U.S. 10-year notes was up 2.4 basis points at 4.503% ahead of the release on Wednesday of the minutes of the Federal Open Market Committee's latest meeting. These may give investors more of a steer on how new Federal Reserve chair Kevin Warsh is approaching monetary policy. (Additional reporting by Satoshi Sugiyama in Tokyo; Editing by Mark Potter and Kevin Liffey) By Amanda Cooper and Pete Schroeder