U.S. stock index futures dropped on Thursday, retreating after two consecutive days of gains ahead of the much-anticipated quarterly earnings report from tech giant Alphabet.
As of 05:40 ET (09:40 GMT), Dow Jones Futures were down by 255 points, or 0.7%. S&P 500 Futures fell 34 points, or 0.6%, and Nasdaq 100 Futures dropped 145 points, or 0.8%.
The previous day, Wall Street saw strong gains after President Donald Trump hinted at the possibility of reducing tariffs on China and softened his stance on the Federal Reserve. The S&P 500 rose by 1.7%, the Nasdaq Composite jumped 2.5%, and the Dow Jones Industrial Average increased by 1.1%, though all three indices ended lower than their peak levels for the day.
Despite the pullback, the major indices are still on track for weekly gains. The Nasdaq has gained 2.6%, the S&P 500 is up by nearly 1.8%, and the Dow Jones Industrial Average is on course for a 1.2% increase.
The earnings season has been positive so far, with strong results setting the tone for the remainder of the reporting period. Alphabet (NASDAQ: GOOGL), the parent company of Google, will report its quarterly earnings after the close of trading on Thursday. Investors will be paying close attention to Alphabet’s plans for investing in artificial intelligence, as the company is one of the biggest spenders in the field.
In addition to Alphabet, several other major companies will release earnings reports on Thursday, including Procter & Gamble (NYSE: PG), T-Mobile US (NASDAQ: TMUS), PepsiCo (NASDAQ: PEP), Gilead Sciences (NASDAQ: GILD), and Comcast (NASDAQ: CMCSA).
Meanwhile, shares of International Business Machines (NYSE: IBM) dropped in premarket trading despite the company reporting better-than-expected earnings and revenue for the first quarter. IBM maintained its full-year guidance, which seemed to disappoint investors.
Southwest Airlines (NYSE: LUV) also saw a drop after the airline announced plans to reduce its flight schedule in the latter half of the year and withdrew its earnings guidance for 2025 and 2026.
President Trump’s comments on potentially reducing the 145% trade tariffs on China helped boost Wall Street, although he stressed that such a move would depend on China’s willingness to negotiate. However, Treasury Secretary Scott Bessent later downplayed the idea of a unilateral tariff reduction, stating there was no offer from Trump to lower the tariffs. Bessent had previously called the U.S.-China tariff exchange unsustainable and expected a de-escalation soon.
China has shown little interest in negotiating, having recently imposed retaliatory tariffs of 125% on U.S. goods.
Trump’s rhetoric against the Federal Reserve also played a role in market sentiment. The President clarified that he did not intend to fire Federal Reserve Chairman Jerome Powell, after previously criticizing Powell on social media for not lowering interest rates to avoid a recession.
Oil prices edged up on Thursday after declining the previous day due to reports of increased supply from OPEC. Both Brent and West Texas Intermediate crude settled around 2% lower on Wednesday following a Reuters report that several OPEC member countries were pushing to accelerate output hikes in June, extending the surprise production boost from May. OPEC and its allies, including Russia, are set to meet next month to finalize plans for June.
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