Global markets turned cautious as disappointing technology earnings reignited concerns over whether massive artificial intelligence investments can deliver sufficient returns. Nasdaq 100 futures fell 1%, threatening to end the index’s three-day winning streak, while S&P 500 futures slipped 0.2%.

Alphabet shares plunged 10% in after-hours trading following weaker-than-expected sales, raising questions about its competitive position in AI despite substantial investment commitments. Samsung Electronics fell 4% after disappointing net income and the absence of a new shareholder-return plan. Investors are now looking to Amazon’s results on Thursday and Apple’s earnings next week for clearer evidence that AI spending is translating into stronger profits. Microsoft gained 2.9% after hours on solid cloud sales, while Oracle rose 11% earlier after presenting a long-term free-cash-flow outlook.

At the Federal Reserve, Chairman Kevin Warsh left the possibility of another rate increase this year open while avoiding explicit guidance on future policy. He also said the Fed plans to reduce its annual number of policy meetings from eight to six, beginning the transition in 2027. Short-dated US Treasury yields fell after the latest decision, as traders reassessed the outlook for interest rates.

Oil prices declined as markets assessed renewed diplomatic efforts to prevent a resumption of US military strikes against Iran. Reports indicate the Trump administration remains in talks over a temporary peace deal, although the outcome remains uncertain. The Persian Gulf continues to be a critical factor for energy markets, with any progress toward de-escalation potentially easing supply concerns, while renewed conflict could quickly reverse the decline in oil prices.

Credit markets are also showing signs of strain. In Japan, corporate credit risk has deteriorated at its fastest pace since September 2022, adding pressure to a bond market already facing record issuance. Meanwhile, US Treasury Secretary Scott Bessent said his team is monitoring financing conditions for AI infrastructure investment but played down recent concerns.

Markets are balancing three key risks: uncertainty over the profitability of AI investment, the direction of Federal Reserve policy, and geopolitical developments in the Persian Gulf. Upcoming technology earnings and progress toward a temporary US-Iran agreement could shape the next move in equities, energy prices and bond yields.

FISG Daily Market Wrap provides a concise view of the forces moving global markets, helping investors stay informed and better prepared for what comes next.

FISG — Interstellar Group