US stocks poised for sluggish start, with Tesla set to ding tech stocks

U.S. stock futures pointed to a cautious start on Monday, as fresh geopolitical worries resurfaced after President Donald Trump tweeted a strong warning to Iran.

Meanwhile, technology stocks were looking particularly weak, given Tesla Motor Co.’s premarket losses after a report the electric-car maker asked suppliers for refunds. That’s as investors waited for another round of earnings to come this week, with Google-parent Alphabet due to report later.

What are the main benchmarks doing?

Dow Jones Industrial Average futures YMU8, -0.07% eased 16 points to 25,014, while S&P 500 futures ESU8, -0.09% slipped 2.3 points to 2,798.50. Nasdaq-100 futures NQU8, -0.36% fell 23.75 points, or 0.3%, to 7,336.50.

Stocks finished roughly flat last week, with the Dow Jones Industrial Average DJIA, -0.03% gaining 0.2% on Friday, the S&P 500 Index SPX, -0.09% adding less than 0.1% and the Nasdaq Composite Index COMP, -0.07% declining less than 0.1%.

What’s driving markets?

Investors could be facing a fresh worry on the geopolitical front after Trump lashed out at Iranian President Hassan Rouhani in an all-caps tweet on Sunday evening, warning him not to threaten the U.S. That came hours after Rouhani cautioned Trump against pursuing a hostile policy towards his country.

To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!
— Donald J. Trump (@realDonaldTrump) July 23, 2018

Oil prices, sensitive to tensions involving oil-producing countries, were moving higher on Monday, with September Brent crude LCOU8, +1.60% up 1% to $73.80 a barrel and U.S. crude for the same month CLU8, +1.25% up 0.5% to $68.59 a barrel.

See: Oil prices could top $120 before year-end, says analyst

Meanwhile, finance ministers and central bankers from the Group of 20 made little progress on trade tensions at a weekend meeting in Buenos Aires, as both U.S. and European Union officials held their ground. Investors have been worried spats between the U.S. and other major trading partners explode into a full-scale trade war, damaging economic growth and investments.

Earnings season rolls on this week, with Alphabet Inc. GOOGL, -0.10% GOOG, -0.17% due to report after the bell on Monday. Analysts are bracing for the tech giant’s profit to take a hit as its absorbs the European Union’s $5.07 billion Android antitrust fine.

That could dent some of the optimism that was pushing the Nasdaq Composite to intraday records last week. Generally, sentiment remains upbeat over Wall Street earnings, on track to show 20% growth in the second quarter.

Which stocks are in focus?

Shares of Tesla TSLA, -2.08% fell 3.6% in premarket trading after a report that the company has asked suppliers for refunds to help it become profitable. Tesla will report second-quarter results on Aug. 1.

Check out: Tesla earnings — investors should gear up for more drama

Merck & Co. Inc. MRK, +0.02% shares slipped 0.8% in premarket. Shares of Chongqing Zhifei Biological Products Co. 300122, -10.00% , which sells Merck’s Gardasil vaccine in China, were suspended temporarily on Monday after tumbling by the daily limit of 10%. That was due to news that Beijing will launch a probe into unsafe vaccines.

Oil services provider Halliburton Co. HAL, +0.53% is scheduled to report results ahead of the open on Monday, as should toymaker Hasbro, Inc. HAS, +0.26%

What is on the economic docket?

The Chicago Fed national activity index for June is due for release at 8:30 a.m. Eastern Time, followed by a report on existing-home sales for the same month at 10 a.m. Eastern.

No Federal Reserve officials are scheduled to speak as it is a blackout week.

What are other markets doing?

European stocks SXXP, -0.24% were trading mostly lower, while Asian stocks ADOW, +0.22% finished mixed. The Nikkei 225 index NIK, -1.33% tumbled 1% as the Japanese yen USDJPY, -0.31% climbed, on a report by Reuters that Bank of Japan officials were looking into how to make a more sustainable stimulus program. Chinese stocks went the other direction, with the Shanghai Composite Index SHCOMP, +1.07% rising 1%, though shares of local vaccine makers fell amid the developing vaccine scandal.

Gold futures CLQ8, +0.00% were inching south, and the dollar DXY, +0.05% was weaker, driven by yen strength.

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