By Ragini Mathur
July 22 (Thomson Reuters) – U.S. stock index futures fell on Wednesday, led by weakness in semiconductor shares, as investors remained wary ahead of the first major Big Tech earnings reports that could determine whether Wall Street’s rally driven by artificial intelligence has additional upside.
After a strong run pushed major indices away from March lows, momentum has faded as volatility in semiconductor stocks has dampened risk appetite.
Investors are now awaiting second-quarter results from Alphabet and Tesla, the first of the “Magnificent 7” mega-cap stocks to report earnings after markets close, in hopes of learning whether the companies’ multibillion-dollar AI investments are delivering returns.
Alphabet will face heightened scrutiny after a delay in releasing a key AI model heightened doubts about its competitive progress.
“If major tech companies — which are funding chipmakers’ revenues — fail to demonstrate returns on their investments or slow their spending, another sell-off in the semiconductor sector could follow,” warned Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Shares of Texas Instruments declined 1.2% in premarket trading, mirroring broader weakness in the semiconductor sector.
iShares Semiconductor ETF slipped 1.8% earlier.
The heavy earnings schedule sets the stage for a potentially turbulent week, compounded by escalating geopolitical tensions.
Conflict in the Middle East remains a focal point, with Yemen’s Iran-backed Houthi militants disrupting two of the world’s most critical energy shipping lanes through threats to maritime traffic.
U.S. Secretary of State Marco Rubio stated Washington is still open to negotiating an end to the Iran crisis, but noted that Tehran appears “not serious” about discussions.
Crude oil prices rose to near six-week highs, creating headwinds for global central banks.
The Federal Reserve is anticipated to maintain interest rates steady for the remainder of 2026, according to the median projection in a Reuters survey of economists; however, officials indicated the likelihood of a rate increase remains significant.
CME Group’s FedWatch tool indicated traders are pricing in over a 70% chance the Fed will keep rates unchanged at next week’s meeting.
At 7:02 a.m. ET, Dow E-minis fell 44 points or 0.08%, S&P 500 E-minis dropped 17.25 points or 0.23%, and Nasdaq 100 E-minis declined 166 points or 0.57%.
On the brighter side, premarket movement showed AT&T advancing 3.8% after the telecom operator reported adding more mobile subscribers than anticipated in the second quarter.
