Wall Street dips 0.6% as AI spending fears grow
Published on July 23, 2026
Wall Street opens under pressure this Thursday. Futures are sliding after Tesla and Alphabet earnings exposed just how much US tech giants are spending on AI. The Nasdaq and S&P 500 are set to open lower, while the ECB announces its rate decision later this afternoon.
Tesla and Alphabet weigh on sentiment before the bell
Nasdaq futures are down roughly 0.6% to 0.7% this Thursday morning, and S&P 500 futures are off 0.1% to 0.3%, according to Benzinga. The Dow, less exposed to tech, holds closer to flat. The trigger: Tesla and Alphabet second-quarter results, released Wednesday evening after a session where the Nasdaq had already slipped 0.57% to 25,691 and the S&P 500 fell 0.13% to 7,499, per The Motley Fool.
Alphabet posted revenue up 24% to $119.8 billion, with cloud growing 82% to $24.8 billion, according to CNBC. But investors focused on something else: the company raised its 2026 capex guidance to a range of $195 to $205 billion, $15 billion higher than previously flagged, with free cash flow turning negative by $5.8 billion for the quarter, reports The Motley Fool. The stock fell as much as 5% after hours. Tesla did not fare better: the automaker delivered 480,126 vehicles, its strongest second quarter on record, but adjusted earnings per share missed the $0.55 consensus, and shares dropped around 5%, according to Vantage Markets.
Why heavy AI spending both spooks and reassures investors
That is the paradox right now. AI-linked revenue is growing fast, but the spending bill is growing even faster, and the market wants proof it pays off rather than promises. At Morgan Stanley, analyst Andrew Percoco kept his Hold rating on Tesla with a $417 price target, saying he is waiting to see whether robotaxi and the Optimus robot ever justify this spending. His counterpart at Wells Fargo, Colin Langan, stayed at Sell, raising his target only to $130.
Not everyone reads this as bad news. Economist Jeremy Siegel of the Wharton School called the recent pullback in tech and chip stocks a healthy sign: "a doubling of earnings does not necessarily justify a doubling in a stock's price," he said, according to Benzinga, framing it as the bull market's maturation rather than its end. CNN's Fear & Greed Index sits at 41.1, still in "Fear" territory but up from 37.9 the day before.
Oil and the ECB add to the cautious mood
Oil keeps climbing. Brent crude is above $96 a barrel, up 2.2%, as tensions between the US and Iran escalate around the Strait of Hormuz, through which nearly a fifth of the world's oil passes, according to a wire report carried by ClickOrlando. Gold is benefiting too, above $4,130 an ounce. That backdrop adds to investor caution ahead of the European Central Bank (ECB) rate decision due later this afternoon. If you trade these indices as part of a prop firm challenge, this is a session worth watching closely.
Key levels today
| Instrument | Level (support / resistance) | Change (prior close) | Scenario / watch for |
|---|---|---|---|
| S&P 500 | Support 7,470 / resistance 7,515 (7,545-7,580 zone beyond) | -0.13% (7,499) | Below 7,470 opens the door to 7,431-7,422; above 7,515, a move back toward 7,545-7,580 |
| Nasdaq Composite | Support 23,700 / resistance 27,000 (medium-term uptrend channel) | -0.57% (25,691) | As long as the index holds this channel, the underlying trend stands despite today's AI-stock slap |
Economic calendar
Weekly jobless claims land at 8:30am ET (2:30pm Paris), consensus 211,000 versus 208,000 the prior week. A print well above 215,000 would strengthen bets on a friendlier Fed and could lift indices into the close.
The ECB decision hits at 2:15pm Paris, followed by a press conference at 2:45pm. Markets price an 88% chance of a hold at a 2.25% deposit rate, per PipTheory. A firmer tone would support the euro, near $1.143; a dovish hold would likely weigh on it instead.
Friday brings July flash PMIs for the eurozone and the US, with the US reading at 9:45am ET (3:45pm Paris). A composite reading above 51 would confirm the economy's resilience heading into the Fed meeting.
Next week, the Fed meets July 28-29. No rate move is expected within the current 3.50%-3.75% range, but the statement's tone could move US indices sharply.
The bottom line
US indices open cautious this Thursday as investors digest Tesla and Alphabet earnings that look strong on the surface but heavy on AI spending. The ECB today, and the Fed next week, are the next events to watch.
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This is not investment advice. This content is provided for informational purposes only.