U.S. stock futures edged higher on Friday as investors balanced escalating geopolitical tensions in the Middle East against encouraging corporate earnings from the technology sector. Markets also assessed the impact of fresh U.S. trade tariffs and ongoing developments in artificial intelligence, while stronger-than-expected results from Intel provided support for sentiment.
Futures recover after previous market sell-off
By 03:34 ET (07:34 GMT), Dow Jones futures were up 197 points, or 0.4%, while S&P 500 futures gained 0.2% and Nasdaq 100 futures advanced 0.1%.
The rebound followed losses on Thursday, when renewed fighting in the Middle East pushed oil prices sharply higher. Iran-backed Houthi forces claimed responsibility for attacks on Saudi oil tankers in the Red Sea, while military exchanges between the United States and Iran continued to intensify.
Brent crude briefly climbed above $100 per barrel, reviving concerns that higher energy costs could fuel inflation and delay interest rate cuts. Rising Treasury yields added further pressure to equity markets.
“The continued rise in energy prices is starting to put pressure on financial markets more broadly, beyond just the bond market. While central banks continue to take a measured approach to the renewed surge in energy prices, there is still plenty of scope for the turbulence in markets to ratchet higher if the U.S.-Iran conflict continues to escalate,” said Jonas Goltermann, Chief Markets Economist at Capital Economics.
Conflict continues despite ceasefire efforts
The U.S. military confirmed it had completed a 13th consecutive night of strikes against Iranian military infrastructure, targeting drone facilities and coastal surveillance assets in an effort to weaken Tehran’s ability to threaten commercial shipping through the Strait of Hormuz.
According to The New York Times, Iran rejected another ceasefire proposal delivered by Iraq on behalf of U.S. President Donald Trump. Iranian officials reportedly maintained that “America’s outlook” remained unacceptable.
At the same time, Yemen’s Houthi movement claimed it had effectively closed the Bab el-Mandeb Strait after launching attacks on Saudi oil tankers. Saudi authorities confirmed one of the reported strikes.
Although Brent crude later eased 1.8% to $98.90 per barrel, prices remain substantially above the levels seen following the brief U.S.-Iran ceasefire announced in June.
Trump introduces new tariff measures
Trade policy also remained firmly in focus after President Trump imposed new import tariffs ranging from 10% to 12.5% on goods from 60 countries.
The White House said the measures replace the previous global 10% tariff and are intended to target countries that have failed to adequately enforce bans on imports linked to forced labour.
Canada and the European Union are among the economies affected despite both having legislation prohibiting forced-labour imports. According to The New York Times, U.S. officials argue those rules have not been sufficiently enforced.
Reports also suggest the administration is considering additional tariffs aimed at addressing what it describes as unfair manufacturing trade practices.
Intel results strengthen AI optimism
Intel (NASDAQ:INTC) shares rose in extended trading after the semiconductor manufacturer reported second-quarter revenue and earnings ahead of market expectations.
Sales increased 25% year-on-year, significantly exceeding forecasts, while the company projected third-quarter revenue of between $15.8 billion and $16.8 billion.
Chief Executive Lip-Bu Tan attributed the performance to artificial intelligence, saying it is “driving unprecedented demand for compute,” and added that Intel is positioned for “sustainable growth.”
Intel remains one of the key beneficiaries of accelerating AI investment thanks to its advanced chip technology and domestic semiconductor manufacturing capabilities, an area that has become strategically important for the U.S. government.
Investors await July PMI data
Attention later in the day will turn to the release of S&P Global’s preliminary July Purchasing Managers’ Index (PMI) data for the United States.
June’s composite PMI stood at 52.2, supported by strong services activity linked to the FIFA World Cup hosted by the United States, Canada and Mexico. Manufacturing activity also expanded for a fourth consecutive month as companies continued building inventories to reduce supply chain risks and offset higher costs associated with the conflict in the Middle East.