US index futures declined during European trading hours on Thursday, with Dow Jones futures losing 0.56% to trade around 52,160, S&P 500 futures down 0.54% near 7,500, and Nasdaq 100 futures falling 0.74% to approximately 28,960 [1]. The downturn was attributed to escalating tensions in the Middle East, as US President Donald Trump threatened strikes on Iranian infrastructure following attacks on ships in the Strait of Hormuz. Tehran responded with threats of retaliation against US-linked energy assets, while Iran-backed Houthi militants launched missiles and drones at two Saudi oil tankers in the Red Sea, marking the first direct strikes on tankers in this critical waterway and raising concerns over Saudi crude export routes [1].
Investor sentiment was further dampened by shifting policy expectations and unclear guidance from new Federal Reserve Chair Kevin Warsh, adding uncertainty to the market. While the Federal Reserve is broadly expected to keep interest rates unchanged at its upcoming meeting, a 25-basis-point rate hike is widely anticipated in September [1].
Wall Street closed lower in the previous session, with the Nasdaq Composite dropping 0.57%, the S&P 500 falling 0.14%, and the Dow Jones finishing nearly flat, down 0.01%. The declines were driven by rising oil prices, fresh corporate earnings, and persistent concerns over massive AI investments [1].
Alphabet shares fell over 3% in extended trading after the company raised its 2026 capital expenditure forecast to as high as $205 billion to meet surging AI demand. This significant increase in spending heightened investor anxiety about whether Big Tech’s aggressive AI investments will yield returns, according to CNBC [1].
CONCLUSION
US stock index futures declined sharply due to heightened geopolitical risks in the Middle East and growing concerns over the financial impact of large-scale AI investments by major technology firms. Alphabet's announcement of a substantial increase in capital expenditures for AI intensified investor unease, contributing to a negative market sentiment and a notable drop in its share price.