US Stock Futures Decline Amid Weak Tech Earnings and Trade War Concerns

US stock futures retreated on Wednesday after disappointing earnings reports from tech giants Alphabet (GOOG, GOOGL) and AMD (AMD) amplified ongoing tensions in the brewing US-China trade war.

Tech Earnings Disappoint

The tech-heavy Nasdaq 100 futures (NQ=F) sank 0.9%, while S&P 500 futures (ES=F) shed 0.5% as markets assessed the latest tech results. Dow Jones Industrial Average futures (YM=F) slipped 0.2%.

Alphabet's shares plunged nearly 7% in premarket trading after its fourth quarter cloud revenue fell short of expectations. Investors expressed concerns that the company's heavy investment in AI may not yield the anticipated returns anytime soon.

AMD's earnings also raised worries about a loss of AI momentum. Despite a revenue beat, a disappointing data center sales forecast overshadowed the results, driving shares down over 8%.

Trade War jitters

Tensions between the US and China remained a significant risk factor, with reports that Apple (AAPL) is facing antitrust scrutiny in China. Bloomberg reported that Beijing is considering targeting the company's App Store in an investigation.

President Trump's ongoing tariff proposals have also made investors apprehensive. His unexpected suggestion that the US could take over the Gaza Strip further unnerved the market.

Strong Earnings Nonetheless

Despite these headwinds, the stock market has shown signs of strength. Companies like Disney (DIS), Aflac (AFL), and Qualcomm (QCOM) are expected to report earnings on Wednesday, and their results will impact investor sentiment.

Economic Data and Market Updates

Later today, economic data on US services activity and private payrolls will provide insights on the trajectory of interest rates. Goldman Sachs has lowered its forecast for Federal Reserve interest rate cuts this year, predicting only one cut in 2025.

Gold prices soared to a record high as investors sought stability amid the trade war. Asian stocks, however, saw mixed results with the CSI 300 Index in China and Hong Kong's Hang Seng Index declining.

Key Takeaway

While tech earnings and trade war concerns weighed on market sentiment, the overall bullish outlook remains, supported by strong earnings and economic indicators. However, uncertainty about Trump's tariffs and the ongoing trade war with China will continue to impact investor decisions.