US stock futures pointed to a weak start on Tuesday as artificial intelligence (AI)-related stocks came under pressure after investors reacted to Samsung Electronics’ earnings, raising fresh concerns over the sustainability of the sector’s sharp rally.
Futures tied to the S&P 500 were down 0.2%, while Dow Jones Industrial Average futures edged 0.1% higher. Nasdaq futures fell 0.8%, indicating that Monday’s rebound on Wall Street was losing momentum.
In the previous session, all three major US indices ended in positive territory, with the Dow Jones Industrial Average closing above the 53,000 mark for the first time.
Samsung, the world’s largest memory chipmaker by market value, tumbled 7.5% in Seoul despite reporting a 19-fold jump in quarterly profit. The sell-off spilled over to its US peers, with Micron Technology falling 4.6% in premarket trading and Intel declining 3.4%. Samsung’s US-based suppliers, Lam Research and Applied Materials, also slipped about 3.7% each.
South Korean chipmaker SK Hynix dropped 6%, dragging the Kospi index down 5.2%. Earlier in the session, an 8% decline in the benchmark triggered a temporary trading halt.
Semiconductor stocks are facing renewed scrutiny after an unprecedented rally, with investors questioning lofty valuations and whether hundreds of billions of dollars of spending on AI infrastructure can be sustained.
The recent volatility has also prompted investors to rotate into previously overlooked sectors within technology and the broader market.
In the currency market, the US dollar edged higher as markets continued to price in another Federal Reserve interest rate hike before year-end. However, expectations of an imminent rate hike eased after US hiring slowed sharply in June, signalling that the labour market remains under pressure despite showing resilience in recent months.
Meanwhile, US Treasury yields also gained ahead of the release of the minutes of the Federal Reserve’s latest policy meeting, due on Wednesday.
Investor focus will also shift to the start of the US earnings season this week. Among the first major companies scheduled to report are Delta Air Lines and PepsiCo, whose results could provide fresh insight into the health of the US consumer.
In the Middle East, reports emerged of fresh attack near the Strait of Hormuz. According to the Associated Press, a Qatari LNG tanker and a Saudi-flagged crude oil tanker were damaged in the area. It marks the first reported attack on a Qatari LNG vessel since the Iran conflict began earlier this year.
Meanwhile, Elon Musk’s SpaceX is set to enter the Nasdaq-100 later on Tuesday, a milestone expected to draw significant institutional interest.
Oil prices rise on fresh Middle East tensions
Crude oil prices traded higher amid fresh attacks in the Middle East that raised concerns over regional stability.
Brent crude climbed above $72 a barrel on Tuesday, although it remained close to its lowest level in more than four months. WTI crude futures also rebounded to around $69 a barrel. On the supply side, Iraq has reportedly restored production at three key oil projects to full capacity as tankers resumed loading cargoes for export.
The move comes as major oil producers continue to ramp up output following easing tensions between the US and Iran.
Crude exports from Saudi Arabia have recovered to about 90% of their pre-conflict levels, matching a strong supply rebound in the United Arab Emirates. Over the weekend, OPEC+ members, led by Saudi Arabia, agreed to increase production quotas for next month, reinforcing expectations of stronger global oil supply.
(With inputs from Bloomberg)
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