US stock market today: Wall Street futures edge lower as chip stocks retreat; crude oil extends gains

The US stock futures traded mixed on Thursday, 16 July, as escalating tensions in the Middle East kept investors cautious, while markets awaited earnings from major technology companies to assess whether lofty valuations remain justified.

Futures tied to the S&P 500 slipped 0.1%, while Nasdaq 100 futures declined 0.4%. Meanwhile, futures linked to the Dow Jones Industrial Average rose 145 points, or 0.3%.

Wall Street ended the previous session higher after a softer-than-expected US producer price index (PPI) reinforced optimism that inflationary pressures are easing.

Chipmakers, which have led this year's equity rally, are increasingly coming under pressure as investors question lofty valuations and whether AI hyperscalers are building more capacity than demand will ultimately justify.

Market participants are also looking to rotate into other segments of the AI ecosystem that offer more attractive valuations.

While semiconductor-related stocks traded broadly lower in pre-market trading, software companies attracted buying interest. Alphabet led gains among the Magnificent Seven technology stocks.

Investors will also closely watch June retail sales and weekly jobless claims later in the day. On the earnings front, UnitedHealth is scheduled to report before the opening bell, while Netflix will announce its quarterly results after the market closes.

NVIDIA will also remain in focus after unveiling a new AI model for robots and vision AI agents on Wednesday, deepening its push into Japan's physical AI market.

Oil extends winning streak

Crude oil prices extended their gains for a fourth consecutive session as the conflict in the Middle East intensified after the United States launched fresh strikes on Iranian missile storage facilities and launch sites near the strategic Strait of Hormuz.

Brent crude futures rose 33 cents, or 0.4%, to $85.28 a barrel, after rallying 12% over the previous three sessions. Meanwhile, West Texas Intermediate (WTI) crude gained 42 cents, or 0.5%, to $80.02 a barrel.

Both benchmark contracts had risen about 0.3% on Wednesday and continued to trade near one-month highs.

Middle East conflict expands

US forces also reportedly fired on a vessel accused of attempting to breach Washington's naval blockade on Iran. Tehran responded with missile and drone attacks targeting US allies in the region and warned that its military operations could intensify.

The continued exchange of strikes between the US and Iran, coupled with renewed threats to the Strait of Hormuz, has effectively derailed the interim truce and revived fears of a broader regional conflict.

Since the outbreak of the conflict in late February, the Strait of Hormuz has remained at the centre of geopolitical tensions. Temporary disruptions to shipping through the vital waterway have fuelled concerns over global energy supplies and pushed oil prices sharply higher.

Looking ahead, Goldman Sachs said Brent crude could climb above $110 per barrel in the fourth quarter if disruptions to Gulf oil exports persist.

(With inputs from agencies)

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