By Niket Nishant and Avinash P
April 23 (Reuters) – Wall Street futures slipped early on Thursday, with investors hesitant to extend the recent equities rally in the absence of clear signals on the U.S.-Iran war, while a batch of mixed earnings further dented sentiment.
Iran seized two ships in the Strait of Hormuz and demanded that the U.S. lift its naval blockade on Iranian ports, which remains in effect even after President Donald Trump extended the ceasefire indefinitely.
Investors keen to look past war-related risks have shown strong resilience in recent days, but some fatigue has set in, leading to brief episodes of risk aversion, as they await more clarity on how and when the conflict may ultimately be resolved.
With oil prices over $100 a barrel, the risk of an inflation flare-up also remains.
“Even in the event that the Middle East conflict eases and shipping resumes as usual through the Strait of Hormuz, it would likely take time for the global economy to normalize after one of the largest oil supply disruptions in decades,” said PIMCO economist Tiffany Wilding.
At 6:44 a.m. ET, Dow E-minis were down 364 points, or 0.73%, S&P 500 E-minis were down 35.75 points, or 0.50%, and Nasdaq 100 E-minis were down 130.5 points, or 0.48%.
PACKED EARNINGS CALENDAR IN FOCUS
The earnings season has been largely strong so far, but because the results reflect only one month of disruption from the Middle East conflict, investors are questioning how dependable they are as a gauge of what lies ahead.
Tesla shares fell 3.5% in the premarket session, after the company raised its spending plan to more than $25 billion for the year.
It is in the middle of one of the most expensive bets in its history as CEO Elon Musk channels funds into artificial intelligence, robotics and chips.
“With all the focus on the war, a forgotten theme that weighed on the market at the start of the year is artificial intelligence overinvestment and diminishing future returns,” said Kyle Rodda, senior financial market analyst for Capital.com.
IBM fell 7% after revenue growth slowed in the first quarter on weakness in its software business.
Peers Microsoft and Adobe declined 1.9% and 2.2%, respectively, before the bell.
Lockheed Martin dropped 4.8% after reporting a lower first-quarter profit.
Industrial conglomerate Honeywell International slipped 7.7% and medical equipment maker Thermo Fisher also fell 4.7% after reporting first-quarter earnings.
On the flip side, Texas Instruments rose 11.8% after forecasting second-quarter revenue and profit above Wall Street expectations, and chemicals maker Dow added 3.5% after reporting a smaller-than-expected first-quarter loss.
American Airlines, American Express, and Comcast are among the other companies due to report on Thursday amid a plethora of earnings.
U.S. ​weekly initial jobless claims and manufacturing activity data scheduled to be released later on Thursday will also be scrutinized for clues on the impact of higher energy prices due to the war.
(Reporting by Niket Nishant and Avinash P in Bengaluru; Editing by Devika Syamnath and Shinjini Ganguli)
