Stocks shake off a lower start, but rising oil and a heavy earnings docket keep the tape on edge before Alphabet and Tesla report
Stocks opened Wednesday on uneven footing, with an early slide giving way to a mixed tape as investors weighed a fresh surge in crude oil against a second-quarter earnings season that has, so far, cleared nearly every bar set for it. In the first hour of trading, the Dow Jones Industrial Average had turned higher, rising about 0.3 percent, while the broad S&P 500 hovered near the flat line and the tech-heavy Nasdaq Composite drifted roughly 0.3 percent lower, pulling back from a strong Tuesday session.
The soft start had been telegraphed before the bell. Premarket index futures pointed lower across the board, with S&P 500 futures off about 0.2 percent, Nasdaq 100 futures down half a percent, and Dow futures barely below the line. The retreat followed a winning Tuesday, when the Nasdaq Composite jumped 1.3 percent, the Dow climbed 0.7 percent, and the S&P 500 gained 0.9 percent on the back of a rebound in semiconductor names. The S&P 500 closed Tuesday at 7,509.20.
The dominant force pressuring sentiment this morning is energy. Crude has gone on a tear, and the move traces directly to the widening conflict in the Gulf. Oil surged more than 4 percent to a six-week high near $88 a barrel, extending gains for a fourth consecutive session as escalating geopolitical tension fueled concerns over global supply. Brent crude pushed above $92 a barrel after U.S. forces carried out an 11th consecutive night of strikes on Iran. The supply anxiety is not confined to one theater. Traders are watching threats to freedom of navigation through the Strait of Hormuz, renewed Houthi threats against shipping in the Red Sea, and an attack on the Caspian Pipeline Consortium terminal on the Black Sea that has pressured exports from Kazakhstan, one of the world’s largest crude suppliers.
That energy spike carries a second-order consequence markets are only beginning to price in. Higher crude is reviving inflation worry at exactly the moment the Federal Reserve is deciding whether it is finished tightening. Traders now see roughly a 24 percent chance of a July rate increase and about a 69 percent probability of at least a quarter-point move by September, according to CME FedWatch data. A market that spent the spring positioning for cuts is quietly repricing the opposite risk, and oil is the reason.
Market Movers
Energy producers were among the early winners as crude climbed. Exxon Mobil traded higher ahead of its own quarterly report, with expectations centered on earnings around $3.76 a share as stronger oil prices lift upstream results. Chip stocks, which powered Tuesday’s advance, gave back some ground at the open after their sharp run, and Arm Holdings slipped in premarket trading following a steep rally.
Earnings set the tone for individual names. Super Micro Computer surged after the AI server maker reported a record backlog, while GE Vernova posted revenue above expectations and a steadily growing order book but missed on earnings per share. On the downside, Cal-Maine Foods reported quarterly revenue of $552.6 million, below forecasts and down nearly 50 percent from a year earlier, with a per-share loss where analysts had expected a small profit, as management pointed to persistently weak demand.
The main event comes after the closing bell. Alphabet and Tesla will be the first two of the “Magnificent Seven” megacaps to report this quarter, with IBM also on deck after a pre-earnings warning triggered a steep drop in its shares last week. The bar is high by design: nearly 88 percent of the S&P 500 companies that have reported second-quarter results have beaten profit estimates, which leaves little room for disappointment and raises the odds that even solid numbers fail to move a stock higher.
Commodities
Beyond crude’s four-session climb, gold held firm as a haven bid persisted, trading around $4,132 an ounce, up about 1.4 percent on the session. Natural gas was mixed in early trading. The through-line across the commodity complex is the same one dominating equities: supply routes in the Middle East, the Red Sea, and the Black Sea are all under pressure at once, and every barrel and ounce is being priced against that backdrop.
The Setup
The session sets up as a standoff between two strong currents. On one side, an earnings season that keeps beating expectations and a technology complex still hungry for the next catalyst. On the other, a crude rally driven by conflict that shows no sign of cooling, and an inflation signal creeping back into rate expectations just as the Fed weighs its next move.
The resolution likely arrives after the closing bell. Alphabet’s results will be measured on AI monetization and Tesla’s on capital spending as it pushes deeper into automation, and together they will set the tone for the back half of the week. Until then, Wall Street holds its breath, one eye on the earnings calendar and the other on the price of oil.
JBizNews Desk | Wall Street
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