U.S. stock futures edged lower on Tuesday morning as investors pulled back from chip makers and AI-linked stocks that had rallied a day earlier.

Optical network provider Coherent was the worst performer in the S&P 500 ahead of the open, falling 6.8%. The stock had climbed 7.8% on Monday, when the PHLX semiconductor index entered bull market territory — a threshold generally defined as a 20% rise from a recent low. Coherent supplies the optical transceivers that move data between servers in AI data centers, which has made the stock a direct beneficiary of the AI infrastructure buildout and sensitive to any shift in sentiment around that spending.

Coherent, Inc., COHR

Rival optical equipment company Lumentum, which serves the same data center networking market, dropped 6.2% in premarket trading. Corning, Intel, Marvell, Micron, Sandisk, Seagate, and Western Digital also declined.

Home Depot Lifts Mood With Earnings Beat

Home Depot, the largest U.S. home-improvement retailer, rose 1.8% after reporting second-quarter results that beat analyst expectations. The results suggested demand for smaller renovation projects remains intact. As the biggest player in its sector, Home Depot's quarterly numbers are widely watched as a barometer of household spending, and the beat landed against a backdrop of elevated mortgage rates that have weighed on housing turnover and big-ticket renovation activity in recent years.

Nike, a Dow Jones Industrial Average component, added 1% in premarket trading. The athletic apparel company's shares had closed at their lowest level in 12 years on Monday, with investors concerned about slowing sales in China and rising competition from newer brands.

Baidu fell 5.2% after the Chinese search engine company reported declines in second-quarter profit and revenue. The company, an early mover in China's generative AI race with its Ernie Bot chatbot, is spending heavily as it transitions into an AI business.

Fabrinet, a contract manufacturer of optical components for networking and AI infrastructure customers, tumbled about 9% to 10% even after its fourth-quarter results beat Wall Street targets. Revenue jumped 45.1% year over year to $1.32 billion. The stock is up about 110% over the past year, and some investors appear to be taking profits.

Flexsteel and Duos Post Strong Numbers

Furniture maker Flexsteel Industries jumped 10% after beating fourth-quarter earnings and revenue estimates. The company guided for first-quarter revenue of $111 million to $115 million, above the $107.9 million consensus. It also generated $24.3 million in operating cash flow during the quarter and completed $62.6 million in share repurchases.

Duos Technologies Group rose 8% after reporting nearly 30% year-over-year revenue growth in the second quarter. The company reaffirmed its 2026 targets of 25 megawatts deployed and more than $50 million in revenue. It also announced a new $111 million contract with a hyperscaler and reported positive adjusted EBITDA of $0.5 million.

Stock futures were also pressured by rising crude oil prices tied to stalled diplomatic talks and concerns over a possible Strait of Hormuz blockade. The strait is the transit point for roughly a fifth of globally traded oil, making it one of the world's most closely watched supply chokepoints.

The session reflects a broader pattern of investors rotating out of recent winners and into stocks showing fresh earnings momentum.

Home Depot's results were one of the clearest positive data points of the session, suggesting consumer spending on home projects has not dried up entirely.

Fabrinet's next-quarter guidance also came in above consensus, with revenue projected between $1.375 billion and $1.425 billion, but the stock still fell sharply.