U.S. equity futures pointed to a soft start on Thursday, signaling further downside for the market as investors digest weaker-than-expected earnings and rising geopolitical uncertainty.
The early pressure stems largely from earnings reactions involving some of the market’s most closely watched names, including Tesla, Inc. (NASDAQ:TSLA) and International Business Machines Corporation (NYSE:IBM).
Tesla shares fell 3.7% in pre-market trading after the EV maker reported third-quarter earnings that came in below estimates despite record delivery numbers. IBM also traded sharply lower before the opening bell, with investors focusing on the slowdown in its cloud division even as results beat expectations.
In contrast, Honeywell International Inc. (NASDAQ:HON) appeared poised for a stronger start after topping both revenue and earnings forecasts for the quarter.
Geopolitical developments added another layer of caution. The Trump administration imposed sanctions on Russia’s top oil producers, Rosneft and Lukoil. The United States Department of the Treasury said the sanctions were due to Russia’s “lack of serious commitment to a peace process to end the war in Ukraine.”
President Donald Trump recently struck a more optimistic tone about resolving the conflict but abruptly canceled a planned meeting with Russian President Vladimir Putin, underscoring the unpredictability of his foreign policy moves — a key factor behind recent market swings.
U.S. stocks ended Wednesday lower across the board. The Nasdaq dropped 213.67 points, or 0.9%, to 22,740.40, the Dow slid 334.33 points, or 0.7%, to 46,590.41, and the S&P 500 shed 35.95 points, or 0.5%, to 6,699.40. Major indexes recovered from session lows late in the day but still closed in the red.
The selloff was driven in part by a sharp decline in Netflix, Inc. (NASDAQ:NFLX), which sank 10.1% to a five-month low after missing earnings expectations and citing a dispute with Brazilian tax authorities. Texas Instruments Incorporated (NASDAQ:TXN) also slid 5.6% after issuing weaker-than-expected guidance for the fourth quarter.
On the upside, Intuitive Surgical, Inc. (NASDAQ:ISRG) rallied 13.9% after reporting better-than-expected quarterly results for its robotic surgery systems business.
Tensions between Washington and Beijing also weighed on market sentiment. During a lunch with Republican lawmakers at the White House, Trump said he hopes to reach a “good deal” with Chinese President Xi Jinping but admitted that the meeting might not materialize.
“Maybe it won’t happen,” Trump said. “Things can happen where, for instance, maybe somebody will say, ‘I don’t want to meet, it’s too nasty.’ But it’s really not nasty. It’s just business.”
Later in the day, Reuters reported that the Trump administration is considering restricting a range of software exports to China in response to new rare earth export limits. The plan isn’t final but would be a concrete step toward Trump’s earlier threat to bar “critical software” shipments.
Tech stocks were hit hard, with the PHLX Semiconductor Sector Index dropping 2.4%. Airline shares also fell, as shown by the 1.9% decline in the NYSE Arca Airline Index.
Additional weakness was seen in retail, housing, and networking names, while energy stocks were among the few gainers thanks to a sharp increase in oil prices.