U.S. stock futures presented a mixed picture early Thursday, as a surge in oil prices tempered the enthusiasm generated by robust quarterly results from major technology companies. Dow Jones Industrial Average futures declined by 269 points, or 0.6%, while S&P 500 futures slipped 0.1%. In contrast, Nasdaq 100 futures managed a slight gain of 0.1%, reflecting the divergent market sentiment.
The recent uptick in crude oil prices has introduced a new layer of uncertainty for investors. Brent crude climbed following reports that President Donald Trump would be briefed on possible military action against Iran, raising concerns about potential supply disruptions. "The oil market has moved from over-optimism to the reality of the supply disruption," noted Warren Patterson, head of commodities at ING Economics. This development has reignited inflation fears, complicating the outlook for monetary policy.
Investors are now juggling three major variables: surging artificial intelligence expenditures from Big Tech, a Federal Reserve that delivered a split decision on interest rates, and elevated oil prices that could stoke inflationary pressures. The Fed, citing stubbornly high inflation partly due to rising global energy costs, left its target range unchanged at 3.5% to 3.75%. The central bank's less dovish tone prompted Morgan Stanley to scrap its forecast for 2026 rate cuts, stating that "the bar for cuts is higher and the Fed seems prepared to wait."
Wall Street's mixed start follows a volatile Wednesday session. The Dow dropped 280.12 points, or 0.57%, while the S&P 500 dipped just 0.04%. The Nasdaq Composite eked out a 0.04% gain as markets digested the Fed decision, monitored oil prices, and looked ahead to Big Tech earnings released after the bell.
Alphabet's results provided a significant boost. The Google parent reported first-quarter revenue of $109.9 billion, a 22% increase year-over-year, with Google Cloud surging 63% to $20.0 billion. CEO Sundar Pichai credited AI investments, stating they are "lighting up every part of the business." Amazon also surpassed expectations, with net sales climbing 17% to $181.5 billion. Amazon Web Services revenue jumped 28% to $37.6 billion, with CEO Andy Jassy noting that AWS is expanding at its quickest rate in 15 quarters.
Microsoft delivered an 18% revenue jump to $82.9 billion, with Azure and cloud services posting a 40% gain. CEO Satya Nadella highlighted that Microsoft's AI segment has reached a $37 billion annual run rate. However, the stock struggled to gain traction. Meta Platforms reported a 33% revenue increase to $56.31 billion but raised its 2026 capital expenditure outlook sharply to a range of $125 billion to $145 billion, up from $115 billion to $135 billion. The company also flagged potential material losses from youth-safety investigations and lawsuits, with CFO Susan Li acknowledging uncertainty about the optimal size of the company in the future.
The contrasting reception to AI-related spending was evident. Jesse Cohen at Investing.com singled out Amazon's AWS reacceleration as "the standout story," while D.A. Davidson's Gil Luria noted that Meta "failed to impress investors," especially compared to Google's stronger performance.
Persistent strength in crude oil could add further pressure on the Fed, as higher transport costs and wages stoke inflation expectations. With U.S. headline and core inflation creeping above 3% again, all eyes are on Thursday's Personal Consumption Expenditures (PCE) data. Traders have begun betting more heavily on a potential rate hike down the line. The market's focus now shifts to upcoming first-quarter GDP and PCE releases, along with Apple's earnings report after the bell.
