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Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., July 20, 2026. REUTERS/Brendan McDermid Purchase Licensing Rights, opens new tab
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Summary
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Companies
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Futures: Dow up 0.29%, S&P down 0.06%, Nasdaq down 0.72%
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Chip stocks lead declines in premarket trading
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Amazon, Meta, Apple and Microsoft to report later this week
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Traders see a 37.4% chance of a Fed rate hike this week
July 28 (Reuters) - Nasdaq futures fell on Tuesday, mirroring a cautious mood across global markets toward AI chip stocks on concerns about hefty corporate spending and rising Chinese competition, ahead of earnings from some of the biggest companies on Wall Street.
Chip bellwethers such as Nvidia (NVDA.O), opens new tab fell 1.1%, Micron (MU.O), opens new tab slid 4.4% and Applied Materials (AMAT.O), opens new tab lost 3.6% in premarket trading, while U.S.-listed shares of Taiwan's TSMC and Korea's SK Hynix fell 2.6% and 3.6%, respectively.
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Global markets have become increasingly volatile this month as investors scrutinized the need for more corporate spending on AI infrastructure, such as semiconductors that underpinned strong gains in chip stocks in the previous quarter.
Roundhill's Memory Exchange Traded Fund lost 6.5% on Tuesday and has been trading below its 50-day moving average for the past two weeks, reflecting weak short-term momentum, while the Philadelphia SE Semiconductor Index (.SOX), opens new tab has fallen over 20% from its all-time high hit in June.
Signs that Wall Street's biggest companies such as Alphabet (GOOGL.O), opens new tab and Tesla (TSLA.O), opens new tab are running out of cash to fund their ambitions have also made markets nervous, while China showcases cheaper AI models and deepens its presence in the competitive semiconductor industry.
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"Should Microsoft, Amazon or Meta also announce a similar dive in their free cash flow levels, that will also reignite the worries that these companies will continue to spend, but the extra spending will have to be on stock and bond issuance," Ipek Ozkardeskaya, a senior analyst at Swissquote, said.
U.S. hyperscalers’ bond issuance surges in 2026
U.S. hyperscalers’ bond issuance surges in 2026
Shows U.S. hyperscalers’ bond issuance surge in 2026
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39.8
33.4
37.9
13.7
16.7
108.1
193.8
Note: Amount in $ billions, 2026 data is as of July 27
Source: LSEG Workspace Patturaja Murugaboopathy
When AI hyperscalers Amazon.com (AMZN.O), opens new tab, Meta (META.O), opens new tab, Apple (AAPL.O), opens new tab and Microsoft (MSFT.O), opens new tab report earnings later this week, investors will be keen to see if their investments, worth over several hundred billion dollars, are yielding returns. The reports are also expected to offer clues on the demand for chips and other AI infrastructure.
Shares of the four U.S. companies were marginally higher in premarket trading on Tuesday.
At 05:32 a.m. ET, Dow E-minis were up 152 points, or 0.29%, and S&P 500 E-minis were down 4.75 points, or 0.06%. Nasdaq 100 E-minis were down 202 points, or 0.72%.
The Federal Reserve is also due to announce an interest rate verdict on Wednesday at the end of its two-day meeting. Traders only see a 36.9% likelihood for a rate hike this week, according to LSEG-compiled data, but are confident that borrowing costs could rise by at least 25 basis points by the end of the year.
Higher interest rates are also a significant headwind for AI companies that are now increasingly reliant on debt markets for funding.
In some relief, oil prices fell 2.6% to a one-week low as a fragile ceasefire between the U.S. and Iran held up despite drone attack reports out of Saudi Arabia, Jordan and Iraq.
U.S. President Donald Trump said the U.S. was having "good talks" with Iran and there was a chance of a deal to end the conflict.
The Conference Board's consumer confidence July report could offer insights on the impact of the conflict on individuals' sentiment.
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Among others, Johnson & Johnson (JNJ.N), opens new tab rose 2.5% after the drugmaker said it would pay an estimated $5.5 billion to resolve tens of thousands of lawsuits alleging its baby powder and other talc products cause cancer.
Boeing (BA.N), opens new tab edged up 0.3% ahead of second-quarter earnings.
Reporting by Johann M Cherian and Utkarsh Tushar Hathi in Bengaluru; Editing by Shinjini Ganguli
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