US stock futures were mixed on Tuesday, with technology shares facing renewed selling pressure as investors weighed the cost of financing artificial intelligence (AI) businesses and the prospect of higher interest rates.
Futures linked to the S&P 500 fell 0.1%, while Nasdaq futures declined 0.5%. Dow Jones Industrial Average futures, however, rose 0.2%.
The latest pressure on technology stocks reflects growing investor concern over the heavy spending and borrowing required to build AI infrastructure. South Korean AI company Elice Group plunged 30% on its stock market debut, while US cloud computing company CoreWeave fell 4.5% in pre-market trading. CoreWeave’s shares have lost around 30% this month amid concerns about the financial risks associated with its expansion.
These worries have intensified as inflation concerns increase and markets assign a higher probability to the US Federal Reserve raising interest rates for a second time this year. Higher borrowing costs could make it more expensive for companies to fund expansion and for consumers to spend.
Oil prices rise as Middle East conflict disrupts outlook
Crude oil prices climbed as continued fighting in the Middle East clouded the outlook for energy supplies and the industry’s return to normal operations.
US benchmark crude rose 2% to $100.55 a barrel, while Brent crude, the international benchmark, gained 1.6% to $111.25.
The uncertainty surrounding the conflict involving Iran has raised doubts about when oil production and supply chains can return to normal, keeping pressure on energy prices.
Meanwhile, the death toll from a Houthi missile attack on a government military camp in southern Yemen rose to 73, all of them newly recruited personnel, a senior Yemeni government official said on Tuesday. The attack was the deadliest since fighting in the country escalated three months ago.
European markets fall amid protests
European stocks also traded lower, with political and economic discontent adding to investor concerns. France’s CAC 40 fell 0.8% to 7,809.10, Germany’s DAX declined 0.8% to 25,109.83, and the UK’s FTSE 100 slipped 0.6% to 10,702.16.
Rising fuel bills, concerns about schools and public services, and a housing crisis have contributed to weeks of protests in several European cities. Demonstrations in France, Italy and Albania have at times led to arrests, injuries, looting and violence.
Netflix and SpaceX results in focus
Investors are also awaiting quarterly results from major US companies, including Netflix and SpaceX, after markets close on Tuesday.
Netflix said last week that it planned to cut around 6% of its workforce, or nearly 1,000 jobs, as part of broader organisational changes.
SpaceX, led by Elon Musk, is due to report its second set of quarterly results since going public in June. Musk said on Monday that he planned to give one SpaceX share to every child in the US next year.
In currency markets, the US dollar weakened to 158.14 Japanese yen from 158.46 yen. The euro slipped to $1.1211 from $1.1227.