Stocks Churn Late as Big-Tech Earnings Kick Off: Markets Wrap

(Bloomberg) — Wall Street traders sent stocks wavering in late hours as they sifted through results from megacaps for clues on whether their massive artificial-intelligence investments are paying off.

A nearly $800 billion exchange-traded fund tracking the S&P 500 churned after the close of regular trading. Alphabet Inc. reported cloud revenue that far surpassed expectations and said the division’s backlog of contracted business ballooned to more than $500 billion. Tesla Inc.’s earnings fell short of estimates. In regular hours, equities also fluctuated as worries about an escalation of the Iran war lifted oil prices.

After last week’s selloff in technology stocks, pressure is building for the biggest spenders on AI to justify their expenditures. With skepticism mounting about the hundreds of billions of dollars being poured into data-center development, earnings reports over the next two weeks will be highly scrutinized.

“We remain constructive on AI’s growth story, but we favor a more balanced exposure across the AI value chain — from semiconductors and hardware to megacap tech and more defensive areas of the industry,” said Ulrike Hoffmann-Burchardi at UBS Chief Investment Office. “Investors should also ensure diversification beyond AI.”

Traders continued to monitor geopolitical developments. The US and Iran signaled they aren’t ready to return to the negotiating table after both countries escalated attacks. Brent oil briefly topped $95, lifting bond yields on concerns about inflationary pressures.

President Donald Trump said the Islamic Republic is “getting hit so hard” following the deaths of four US troops in the past week, but wasn’t yet ready to sign a deal. He earlier vowed to hit Iranian bridges and power plants if Tehran continued attacking vessels in the Strait of Hormuz.

If the US strikes bridges or power plants, “Iran will strike infrastructure and bridges in the region, including energy facilities in which the US has interests,” the semi-official Tasnim news agency reported.

“Diplomatic efforts to end the conflict in the Middle East have effectively stalled as military strikes continue with no sign of easing,” said Ian Lyngen at BMO Capital Markets. “The rally in energy continues to weigh on the Treasury market as hostilities between the US and Iran intensify.”

The escalation in the conflict has raised concerns about higher interest rates. Just a week before the Federal Reserve’s policy meeting, money markets indicate traders see a roughly 30% chance the central bank will hike and a 70% chance it stays on hold.

Corporate Highlights:

International Business Machines Corp. cut its full-year sales outlook, including for its closely watched software unit, after reporting a dip in demand for its mainframe business. Texas Instruments Inc., the biggest maker of analog and embedded processing chips, gave a sales forecast that topped estimates but failed to excite investors, who have bid up the company’s shares this year. ServiceNow Inc. reported better-than-expected quarterly sales and bookings, boosting Wall Street’s hopes that the software maker’s new AI tools will spur growth. Southwest Airlines Co. provided an outlook for the full year that exceeded projections, even as operating revenue for the second quarter missed analysts’ estimates. What Bloomberg Strategists Say…

“Beyond the headline earnings, investors are laser-focused on hyperscalers’ returns on their ever-rising AI capex, which will help shape the market reaction to the quarterly results.”

—Tatiana Darie, Macro Strategist, Markets Live. For the full analysis, click here.

Some of the main moves in markets:

Stocks

The S&P 500 fell 0.1% as of 4 p.m. New York time The Nasdaq 100 fell 0.5% The Dow Jones Industrial Average was little changed The MSCI World Index was little changed Currencies

The Bloomberg Dollar Spot Index was little changed The euro rose 0.1% to $1.1411 The British pound was little changed at $1.3374 The Japanese yen was little changed at 163.15 per dollar Cryptocurrencies

Bitcoin fell 0.8% to $65,858.29 Ether rose 0.2% to $1,926.32 Bonds

The yield on 10-year Treasuries advanced three basis points to 4.66% Germany’s 10-year yield was little changed at 3.17% Britain’s 10-year yield was little changed at 5.03% Commodities

West Texas Intermediate crude rose 2.3% to $86.30 a barrel Spot gold rose 1.3% to $4,131.42 an ounce ©2026 Bloomberg L.P.