US stock futures traded close to flat on Thursday as investors weighed encouraging inflation data, another strong round of corporate earnings and ongoing geopolitical tensions in the Middle East. Market attention also turned to a busy schedule of economic releases and earnings reports that could shape sentiment for the remainder of the week.
Futures pause after inflation-driven gains
Wall Street futures were little changed in early trading following Wednesday’s rally, which was fuelled by softer-than-expected US inflation figures.
By 04:00 ET, S&P 500 futures were down 0.2%, Nasdaq 100 futures had fallen 0.4% and Dow Jones futures were broadly unchanged.
The latest inflation data strengthened expectations that the Federal Reserve will leave interest rates unchanged in the near term. However, investors remained cautious as military tensions between the United States and Iran continued to create uncertainty, while recent volatility across semiconductor stocks kept valuations in the artificial intelligence sector under scrutiny.
With inflation concerns easing, market attention has shifted back to whether corporate earnings can continue to support this year’s strong equity rally.
TSMC reinforces confidence in AI demand
Taiwan Semiconductor Manufacturing Company (NYSE:TSM) reported record quarterly earnings, highlighting continued strength in global demand for artificial intelligence chips.
The company posted a 77% increase in second-quarter net profit to T$706.6 billion (US$22 billion), comfortably exceeding analysts’ expectations.
As the world’s largest contract chip manufacturer, supplying customers including Nvidia and Apple, TSMC is widely viewed as a key indicator of investment trends across the AI industry.
The results followed upbeat guidance from ASML earlier this week, reinforcing confidence that companies supporting AI infrastructure continue to benefit from robust customer demand despite recent share price volatility.
Apple secures AI approval in China
Chinese technology stocks also attracted investor attention after Apple (NASDAQ:AAPL) received regulatory approval to introduce Apple Intelligence features in China.
Alibaba (NYSE:BABA) rose nearly 5%, while Baidu (NASDAQ:BIDU) gained around 4% after China’s cyberspace regulator approved Apple’s on-device generative AI services for iPhone users.
The approval removes a significant regulatory obstacle for Apple as it expands its artificial intelligence offering in one of its largest markets, while also creating opportunities for domestic technology companies supporting its AI ecosystem.
Middle East tensions remain a key risk
Despite improving sentiment surrounding inflation and earnings, geopolitical developments continued to influence financial markets.
The US military carried out another round of strikes against Iran, with US Central Command stating that operations targeted sites linked to attacks on commercial vessels passing through the Strait of Hormuz.
President Donald Trump also reiterated that military action would continue until Iran agreed to negotiations.
Although markets have become less sensitive to daily headlines, investors remain alert to the possibility of disruptions to one of the world’s most important oil shipping routes. Any sustained increase in energy prices could reignite inflation pressures and complicate the Federal Reserve’s policy outlook.
Busy calendar ahead
Investors are also preparing for another busy session of corporate earnings and economic releases.
Netflix (NASDAQ:NFLX), GE Aerospace (NYSE:GE), State Street (NYSE:STT) and U.S. Bancorp (NYSE:USB) are all due to publish quarterly results.
Meanwhile, June retail sales figures and the latest weekly jobless claims data are expected to provide fresh insight into the health of US consumer spending and labour market conditions.
Stronger-than-expected earnings and economic data would reinforce confidence in the resilience of the US economy, while weaker figures could revive concerns over slowing growth following this year’s strong stock market gains.
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