North American Morning Briefing: Oil Falls Further as Chip Selloff Deepens

OPENING CALL

Stock futures were mostly down Tuesday as oil continued to fall and fears of AI spending triggered a selloff in tech shares.

Nasdaq futures slid following a 10% tumble for South Korea's Kospi index, which was led by sharp declines for SK Hynix and Samsung Electronics.

"Tech concerns have been the dominant driver in Asia this morning as renewed worries over AI investment spending, and competition from cheaper Chinese companies, have triggered another selloff in global semiconductor stocks," Deutsche Bank said.

Meanwhile, Brent crude slid more than 2% to about $84 a barrel after settling 8.7% lower in the previous session.

Investors are now looking ahead to the Federal Reserve's policy decision on Wednesday. Analysts widely expect the Fed to stay on hold but money markets price in a 38% probability of a hike, according to LSEG.

For his second monetary policy committee meeting, Fed Reserve Chairman Kevin Warsh won't challenge the consensus, Natixis Investment Managers said.

Warsh "will not give in to the temptation to raise the Fed funds rate by 25 basis points, even though, at this stage, bringing inflation back to target by the end of the year is virtually out of reach , " it added.

T. Rowe Price said the number of dissents at this week's Fed meeting will be watched as an indication of the range of views within the FOMC. More than three dissents would be a clearer sign that the committee is moving toward a September hike , even if it remains on hold in July.

For the day ahead, key economic data comes from U.S. advance foods trade balance for June. Visa, Paypal and Boeing are among companies reporting earnings.

Stocks to watch

Stocks to Watch:

Intel shares fell 3.8%, Micron Technology slipped 4.9%, Nvidia lost 1%, Super Micro Computer declined 3.2% and Western Digital dropped 5.2%, as AI spending fears triggered a selloff.

Johnson & Johnson gained 2.4% after the company put an end to talc litigation .

Watch For:

U.S. S&P Cotality Case-Shiller Home Price Index for May; U.S. Conference Board Consumer Confidence for July; Boeing 2Q earnings, Coca-Cola 2Q earnings; Ford 2Q earnings; Mondelez 2Q earnings; UPS 2Q earnings; Visa 2Q earnings

Today's Top Headlines/Must Reads:

- Iran and Oman Seek Agreement on Hormuz in Bid to Jumpstart Peace Talks

- Meta Is Fighting a Mountain of Social-Media Lawsuits-at Just the Wrong Time

- Impressed by Ukraine's Battlefield Gains, Trump Warms to Zelensky

MARKET WRAPS

Forex:

The dollar eased slightly

amid uncertainty over the U.S.-Iran conflict and following renewed calls for interest-rate cuts from President Trump.

The euro traded steady. The currency is failing to find much support from the pullback in oil prices as markets position for the possibility of the Federal Reserve raising interest rates on Wednesday, ING said.

Bonds:

Treasury yields declined in early trade as oil prices also moved lower, both extending Monday's moves. Higher demand for Treasurys and the decline in oil prices come as U.S.-Iran diplomacy aimed at a short-term solution in the Middle East war has accelerated.

Energy:

Oil prices extended losses as a lull in U.S.-Iran hostilities spurred diplomatic efforts, with Iran and Oman seeking an agreement to reopen the Strait of Hormuz.

Metals:

Gold prices were under renewed pressure, slipping back below $4,100 an ounce as investors await remarks from Fed Chairman Kevin Warsh this week.

Copper

Copper prices fell in early trade on likely profit-taking activities, after the base metal ended higher in the previous session as a pause U.S.-Iran fighting pushed oil prices lower and eased concerns over inflation and growth.

Iron ore

Iron ore futures fell in early trade. The decline is likely due to ongoing oversupply concerns, said ANZ Research.

TODAY'S TOP HEADLINES

Big Tech Stocks Are Pricing In a Miracle on Costs

Wall Street's forecasts for Big Tech require a major leap of faith: that the biggest AI hyperscalers can boost revenue much faster than the costs of running their businesses. Some of the numbers look too good to be true.

Investors are already on edge about these companies' soaring capital expenditures related to artificial intelligence. S&P this month cut Oracle's credit rating to one notch above junk. Alphabet shares slipped last week after the Google parent boosted its capex estimates. Microsoft and Meta Platforms report earnings Wednesday, while Amazon.com's results are due Thursday.

The Price to Finance the AI Data Center Boom Is Rising, Just Ask Meta

Meta Platforms is counting on Wall Street to pick up the tab for a massive artificial-intelligence spending spree. It picked a time when lenders' wallets are starting to feel light.

A borrowing binge this year for big tech companies is giving debt investors fatigue and pushing up the cost of capital across the industry. Lenders on Monday demanded higher yields on bonds from a new data-center project in El Paso, Texas, leased by Meta compared with a similar project last year. Concerns about more AI-adjacent debt coming, especially after an aggressive spending forecast from Alphabet's Google last week sparked a selloff in tech stocks and helped push down prices of bonds from companies like Microsoft and Amazon.com in recent days.

FAA Says Airlines Should Check Seat Installation on Some Boeing Planes

Operators of Boeing passenger airplanes should inspect the seats on certain models, which might have been improperly installed and could prove dangerous in case of an emergency landing, the U.S. aviation authority said.

In a proposed airworthiness directive published Monday, the Federal Aviation Administration said it had received a report that seats on some of the aircraft maker's models weren't correctly installed in their seat tracks. The proposed directive would require a "detailed inspection" of the seat installation, the FAA said.

Oil Extends Fall on Hopes of Hormuz Reopening, But Chip Selloff Deepens

Oil prices extended losses as a pause in fighting between the U.S. and Iran held, while U.S. tech futures fell as a chip selloff continued.

U.S. President Trump said that talks between the U.S. and Tehran are taking place, as Iranian and Omani diplomats worked on an agreement to reopen the Strait of Hormuz. Brent crude fell further below $87 a barrel in response, while U.S. Treasurys strengthened and the dollar fell.

Kevin Warsh Wanted a 'Good Family Fight' at the Fed. He's Getting One.

On the evening of June 15, before the first day of his first policy meeting as Federal Reserve chairman, Kevin Warsh sat down to dinner with the 18 officials who set interest rates alongside him. Gathered around a rectangular table, he announced his plan: five panels of outside experts would spend the next few months examining how the Fed reads the economy and explains itself.

Governor Christopher Waller, a former economics professor with a reputation for saying what others won't, put Warsh on the spot, according to several people familiar with the dinner. What's the point of all this, he asked. Tell me who you're putting on these groups, he said, and I'll tell you what they'll say. There were no brilliant ideas out there that everyone had somehow missed.

Bank of Japan Set to Hold as It Assesses Impact of June Increase

TOKYO-The Bank of Japan is likely to take a breather this week to assess the effects of its latest move after raising its policy rate to the highest level in three decades.

For clues on the timing and pace of future action, markets will closely examine the bank's latest economic and inflation forecasts.

Western Powers Race to Bring the Production of Explosives Back Home

The business of explosives is booming as Western governments unleash spending to bring production home.

At least 24 new projects are under way for propellants or explosives across NATO countries, according to information assembled by The Wall Street Journal. Three new factories are set for just Arkansas, a center of U.S. weapons production.

Trump Turns Up the Heat on RFK Jr. to Cut Back Childhood Vaccines

WASHINGTON-At a May lunch at the president's golf course in northern Virginia, President Trump asked Health and Human Services Secretary Robert F. Kennedy Jr., why he wasn't doing more to probe the alleged connection between vaccines and autism, according to people familiar with the matter. The health secretary had the yips, Trump told Kennedy, according to one of the people.

Kennedy was taken aback. Even though he has long been known to be skeptical of vaccinations, he had been asked by White House political advisers to tone down his vaccine efforts ahead of the midterms, the people said.

Panama Canal Cuts Capacity, Snarling More Trade Routes

Two of the world's most important shipping lanes have been gummed-up by the Iran War, and a third is now having its own problems because of weather. The slowdown could drive up prices for everything from oil to home goods.

The Panama Canal is starting to reduce its capacity because of the onset of El Niño, a weather pattern that can cause severe droughts and other extreme weather events.

Write to priscila.barrera@wsj.com

TODAY IN CANADA

Earnings:

Centerra Gold 2Q

First Quantum 2Q

Gt-West Life 2Q

Intact Fin 2Q

Precision Drlg 2Q

Tilray Inc 4Q

Toromont Ind 2Q

Trican Well 2Q

Economic Indicators (ET):

Nothing major scheduled.

Stocks to Watch:

Devonian Health Group Which Trades on TSXV and OTCQB, Files to Offer Common Units and Seeks NYSE American Listing; Files to Offer Up to 3.07M Units at Expected Price of $6 to $8 Each

Entree Resources Names Sarah Strunk as an Independent Director; Strunk Will Fill Vacancy on Board Created by Stephen Scott's Retirement

First Capital REIT 2Q EPS C$0.11

(MORE TO FOLLOW) Dow Jones Newswires

July 28, 2026 06:01 ET (10:01 GMT)