North American Morning Briefing: Stocks Set to Fall as Alphabet and Tesla Results Reignite Spending Fears

OPENING CALL

Stock futures were down Thursday while oil prices were racing back toward $100 a barrel.

Brent crude futures jumped about 4% to trade more than $25 above their early July lows after Yemen's Houthis claimed the attacks of two Saudi oil tankers in the Red Sea.

"The U.S.-Iran conflict has shown no sign of easing, and there's still no indication of any emerging peace deal either," Deutsche Bank said.

Goldman Sachs still forecasts Brent at an average of $75 a barrel in 2027, saying strategic stockpiling should provide a floor for prices despite an expected global supply surplus.

However, it warned Brent could surge above $120 a barrel

if disruptions to the Strait of Hormuz persist through next year, with further upside if the Bab el-Mandeb Strait and the Suez Canal are also disrupted.

Investors were also digesting yesterday's batch of Big Tech earnings. Earnings from Alphabet and Tesla increased concerns about the scale of spending on artificial intelligence.

Another AI chip giant's results are expected today, as Intel reports after the closing bell. Earnings from RTX, Lockheed Martin, Blackstone and American Airlines are also due.

Stocks to watch

Alphabet slid more than 3% premarket after the tech company announced plans to significantly boost its capital expenditure.

STMicroelectronics upgraded its AI data-center revenue targets, but its shares took a tumble in a sign of high investor expectations.

Tesla reported negative free cash flow of more than $1 billion in the second quarter amid heavy spending on AI and robotics. Shares fell about 5% premarket.

Watch For:

Weekly Jobless Claims, Intel 2Q earnings, RTX 2Q earnings

Today's Top Headlines/Must Reads:

-The Fed Is Heading Into One of Its Most Unpredictable Meetings in Years

-Google Has the Muscle to Overpower Spending Worries

-Global Household Wealth Jumped in 2025, Raising Stakes for Profitability of AI

MARKET WRAPS

Forex:

The dollar eased in the absence of fresh catalysts to propel the currency higher.

The euro rose ahead of the ECB's policy decision later in the day.

Sterling could continue to hand back recent gains if U.K. short-dated rates drift lower and fiscal risks return, ING said.

Bonds:

Treasury yields across maturities were trading at or near multimonth highs in early trade, only marginally higher on the day, as oil prices continued rising.

There is increasing focus on the outright level for government bond yields, such as the 30-year Treasury yield, Danske Bank said.

Within euro fixed income markets, the two- to five-year segment currently offers the most compelling risk-reward profile

, Carmignac said.

Energy:

Oil prices extended gains for a fifth consecutive session after the U.S. carried out another round of strikes on Iran and unverified reports said Houthi rebels targeted two tankers in the Red Sea, fueling concerns over disruptions to another key shipping route.

Metals:

Gold prices fell after reaching a two-week high on Wednesday, as escalating tensions in the Middle East drove oil higher, fueling concerns over inflation and interest-rate hikes.

Copper

Copper was higher in early trading. Signs of supply tightness are lending support, said ANZ.

Iron

Iron ore rose in early trading. The global surge in iron-ore shipments during the first half of the year has largely run its course, Nanhua Futures said.

   TODAY'S TOP HEADLINES 

Google Has the Muscle to Overpower Spending Worries

Google-parent Alphabet has been on a tear the past year. There are plenty of reasons to believe its stock still has room to run, despite worries about its AI spending.

Last summer, the company was mired in antitrust scrutiny and facing questions about its dominance in search ads. The threat that OpenAI's ChatGPT could take away search traffic and erode its more than 90% market share seemed real. Google hadn't established itself as a force in AI. Some analysts even suggested the company would be more highly valued if it were broken up.

Shares of SpaceX Supplier STMicroelectronics Slump Despite Boost to AI Data-Center Sales Goal

STMicroelectronics shares plunged even though the European chip maker raised its data-center revenue target for a second time this year as the race to build artificial-intelligence infrastructure keeps adding fuel to semiconductor demand.

The group, which counts Apple, Elon Musk's Tesla and SpaceX among its clients, said revenue from data centers should grow above $1 billion this year and well above $2 billion next year compared with prior guidance of about $1 billion in 2026 and roughly $2 billion in 2027.

Segro Shares Rise After Board Yields to Prologis's Final $18.7 Billion Takeover Bid

Shares in Segro hit a near four-year high after the company succumbed to U.S. warehouse giant Prologis's latest 14 billion pounds ($18.72 billion) offer proposal, having rejected three previous attempts.

London-listed shares were up 7.1% at 958.60 pence in early trading Thursday, a level not seen since September 2022. They are currently up 33% over the year to date.

Dubai's DP World to Build Two New Terminals on U.A.E. East Coast, Bypassing Hormuz

DOHA, Qatar-Dubai-based DP World said it will develop two new maritime terminals in Fujairah on the United Arab Emirates' eastern coast, expanding its logistics network in a move that will help reduce the country's reliance on the Strait of Hormuz.

The project, agreed in principle with the Fujairah Ports Authority under a 50-year concession, includes a container and multipurpose terminal and a general-cargo terminal, the global ports operator said Wednesday. Construction is expected to take about 24 to 30 months, it noted.

The Fed Is Heading Into One of Its Most Unpredictable Meetings in Years

Next week's Federal Reserve meeting is shaping up as one of the least predictable in years. A renewed oil shock and a hawkish faction pressing to raise rates have collided with cooler inflation data that helps the case for a hold. Presiding over it is a new chairman who has revealed nothing about which way he leans.

Warsh has vowed repeatedly over the last two months to restore price stability, to disabuse investors of the idea the Fed has implicitly accepted higher inflation. He hasn't spelled out how current interest rates will accomplish that.

Global Bond Yields Jump as Oil Prices Surge, Inflation Fears Mount

U.S. and U.K. 10-year government-bond yields rose to two-month highs while the equivalent German yield hit its highest level since 2011 in European trading hours as escalating military clashes in the Middle East lifted Brent crude oil prices close to $100 a barrel.

High oil prices raise concerns about the risk of rising inflation and the possibility that central banks might have to raise interest rates in response.

Global Household Wealth Jumped in 2025, Raising Stakes for Profitability of AI

Global household wealth surged last year as expectations of bumper profits from artificial intelligence pushed equity prices to new highs, but that has raised the stakes for the new technology and threatens an economically damaging correction should it disappoint.

According to a report published Thursday by the McKinsey Global Institute, household wealth grew to $570 trillion in 2025, an increase of 7.3% from 2024. That was a faster rise than the 5.9% average recorded since 2000, and was unusual in other respects.

U.S. Surges Forces Toward Middle East, Giving Trump Options to Expand Iran War

WASHINGTON-The U.S. is surging forces, medics and weaponry to the Middle East to give President Trump more muscular military options as he considers expanding the conflict against Iran, according to people familiar with the matter.

In the past week, special-operations forces have deployed to the region from their U.S. bases, according to flight-tracking data and U.S. officials. Squadrons of jet fighters have been staged across the Middle East, and bomber aircraft at bases in the U.S. and U.K. are on high alert to ramp up operations, according to one of the officials.

Carney Has Tried the Carrot and the Stick With Trump-but Neither Is Working

TORONTO-Prime Minister Mark Carney swept to power promising an "elbows out" stance against President Trump's tariff threats and rhetoric, vowing he would never accept a bad trade deal.

Sixteen months later, Carney says he has avoided making a bad deal but critics say it has come at a cost: A series of trade concessions to the U.S. that are beginning to add up.

Can Lina Khan Make Peace With New York's Business Community?

New York City Mayor Zohran Mamdani has kept the city's business leaders waiting to see his plan to grow the local economy.

This week, the city's business elite received an unexpected surprise when Mamdani named a new chair of the city's powerful Economic Development Corporation: Lina Khan, the 37-year-old who made her name crusading against the world's largest corporations as head of the Federal Trade Commission during the Biden administration.

Trump Says U.S. Will Bomb Iran's Power Plants, Bridges if Tehran Strikes Ships

WASHINGTON-President Trump threatened to destroy Iranian infrastructure if Iran attacks vessels transiting the Strait of Hormuz, in the latest sign he is planning to escalate the conflict.

Trump wrote on Truth Social Wednesday that the U.S. will "bomb and destroy ONE BRIDGE OR POWER PLANT," including infrastructure in or near Tehran, every time Iran shoots at a ship in the strait.

Write to priscila.barrera@wsj.com

TODAY IN CANADA

Earnings:

Cenovus Energy 2Q

FirstSvc Corp 2Q

Foraco Intl SA 2Q

Mullen Grp Ltd. 2Q

Ovintiv Inc 2Q

Teck Resources 2Q

Teck Resources 2Q

Winpak Ltd. 2Q

Economic Indicators (ET):

0830 May Employment Insurance

0830 May Retail trade

Stocks to Watch:

(MORE TO FOLLOW) Dow Jones Newswires

July 23, 2026 06:24 ET (10:24 GMT)

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