Investing.com - U.S. stock futures edge lower on Friday, as markets assess a flood of corporate earnings and eye a possible softening in the ongoing U.S.-China trade spat. Beijing is reportedly considering exemptions to its retaliatory levies for some products, including some semiconductor-related items. Google-owner Alphabet’s (NASDAQ:GOOGL) first-quarter income tops estimates, while the search giant reiterates its heavy capital expenditure plans in spite of tariff-driven economic uncertainty.
1. Futures inch lower
U.S. stock index futures dipped on Friday, as investors gauged earnings from Google-owner Alphabet and a potential de-escalation of trade tensions.
At 06:51 ET (10:51 GMT), Dow Jones Futures slipped 187 points, or 0.5%, S&P 500 Futures dropped 15 points, or 0.3%, and Nasdaq 100 Futures fell 74 points, or 0.4%.
The main averages on Wall Street advanced for a third consecutive session on Thursday, buoyed by indications that U.S. President Donald Trump’s administration may be softening its stance towards Beijing. Trump has made China a central target of his aggressive tariff agenda, raising levies on the world’s second-largest economy to at least 145%.
China, in response, has slapped a 125% duty on American imports. Its Commerce Ministry has called on the U.S. to cancel all of its "unilateral" tariffs, while media reports have suggested that Trump officials are considering bring down the sky-high rate of its levies. U.S. Treasury Secretary Scott Bessent has argued that the current tariffs are unsustainable.
In individual stocks, several names, including Procter & Gamble (NYSE:PG), PepsiCo (NASDAQ:PEP), American Airlines (NASDAQ:AAL), and Chipotle Mexican Grill (NYSE:CMG), either scrapped or cut their financial forecasts due to uncertainties around the impact of the tariffs. However, ServiceNow (NYSE:NOW)’s profit beat estimates thanks to strong demand for its artificial intelligence-driven software, sending its shares higher by 15.5%.
2. China mulling some on U.S. tariff exemptions - Reuters
China is considering giving an exemption to some U.S. products to its steep retaliatory tariffs and is asking businesses to identify goods that could be eligible, according to Reuters.
Citing a source close to the matter, the news agency said a taskforce from China’s Ministry of Commerce is putting together a list of items that might be exempted and asking companies to submit their own requests.
The president of the American Chamber of Commerce in China told Reuters that China’s government has been "asking our companies what sort of things are you importing to China from the U.S. that you cannot find anywhere else and so would shut down your supply chain."
Beijing is eyeing possibly including eight semiconductor-related products -- but no memory chips -- in the exemptions, the Caijing financial news magazine also reported.
3. Alphabet reports
Shares in Alphabet jumped in extended hours trading after the Google parent reported better-than-anticipated first-quarter income and backed its heavy AI spending plans despite ongoing tariff-fueled economic turbulence.
Operating income at the search giant came in at $30.6 billion during the period, well above analysts forecasts, while group-wide revenue was broadly in line with expectations.
Capital expenditures increased to an all-time peak of $17.2 billion, as the company reiterated its objective to invest $75 billion this year in a bid to enhance its AI capabilities. Questions have recently swirled around such massive spending by Google and many of its mega-cap tech peers following the emergence of a competitive, low-cost AI model from Chinese start-up DeepSeek.
Meanwhile, executives said it was too early to comment on the effect -- if any -- of Trump’s elevated tariffs. While Google’s operations do not stand to take a direct hit from the levies, many of the businesses that spend money on its advertising and cloud platforms could be impacted.
Firms have flagged that the widespread uncertainty around the tariffs is making it more difficult to plan for the future, leading some analysts to predict that these companies could rein in their marketing budgets.
4. More earnings ahead
Investors will likely be keeping their gazes fixed on corporate results, with the latest quarterly earnings season kicking into high gear.
Prior to the start of trading on Wall Street, a slew of reports are scheduled, including figures from AbbVie (NYSE:ABBV), HCA Healthcare (NYSE:HCA), Colgate-Palmolive (NYSE:CL), Phillips 66 (NYSE:PSX), and Centene (NYSE:CNC) Corporation.
AbbVie could be a particular focus for markets. Traders are curious to see if the company provides any guidance around how it plans to cope with potential U.S. pharmaceutical tariffs and drug price controls, analysts at Vital Knowledge said in a note to clients.
HCA’s management may also face questions over the possible impact of cuts to Medicaid, the Vital Knowledge analysts added.
On the economic calendar, the final reading of the University of Michigan’s consumer sentiment survey is set to be released. The preliminary data showed that households had a deteriorating view of the economy and expected higher inflation due in large part to the global trade tensions.
5. Oil on pace for weekly loss
Oil prices edged higher, but the market was headed for a weekly decline amid concerns about oversupply from the Organization of the Petroleum Exporting Countries.
Both the Brent and West Texas Intermediate crude contracts were set to decline nearly 2% this week after Reuters reported that several oil producing nations in the OPEC cartel are pushing to accelerate output hikes in June, extending May’s surprise boost, as internal disputes over quota compliance deepen.
OPEC and allies like Russia, a group known as OPEC+, will meet on May 5 to finalize their plans for June output levels.