Nasdaq 100 futures declined 1.27% ahead of Tuesday's opening bell, as a Wall Street Journal report revealing that OpenAI fell short of its internal revenue and user targets triggered a sell-off in artificial intelligence-related equities. The tech-heavy index's futures pointed to a cautious start, with Oracle dropping 7.7% in premarket trading, CoreWeave falling 7.4%, and SoftBank closing nearly 10% lower in Tokyo. Arm also tumbled 8.1%.
Oil Surge Adds to Pressure
Brent crude oil rose 3% to $111.40 per barrel, while U.S. crude gained 3.8% to $100, as supply disruptions in the Strait of Hormuz and dissatisfaction with Tehran's latest offer heightened geopolitical risks. The jump in energy prices compounded the unease, raising concerns that higher fuel costs could begin to bite into corporate margins and consumer spending.
Market Context
The retreat came just after both the S&P 500 and Nasdaq had hit all-time highs, signaling a shift in sentiment. S&P 500 E-minis slipped 0.68%, while Dow E-minis edged up 0.17%. Investors are bracing for a busy week, with heavyweight tech earnings from Microsoft, Alphabet, Amazon, and Meta, as well as the Federal Reserve's policy decision.
Earnings Spotlight
On the corporate front, General Motors raised its 2026 core profit guidance to between $13.5 billion and $15.5 billion, citing a strong first quarter boosted by truck sales and a $500 million tariff refund. Coca-Cola also topped expectations, raising its full-year comparable EPS growth outlook to 8%-9%. Conversely, UPS posted weaker first-quarter numbers, with revenue and adjusted EPS falling short, while Spotify shares slumped 12% after projecting second-quarter operating income below analyst estimates.
Fed and Inflation Watch
The Federal Reserve's position looks more challenging as rising oil prices muddy the inflation outlook. Traders are betting rates will hold steady this week, but the persistent inflation pressures could complicate future policy moves. The upcoming tech earnings will be scrutinized to see if AI investments are still justifying the elevated valuations of big tech.
Broader Implications
While robust results from names like GM and Coca-Cola have held the market together, the downside risks are mounting. If OpenAI jitters ripple through AI suppliers and oil's run continues to stoke inflation, it may take more than another round of dip-buying to keep the record rally on track. The market is now navigating a delicate balance between growth optimism and rising cost pressures.
