US futures steady after steep Big Tech-led sell-off
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US stocks steadied ahead of the bell Thursday, as investors regrouped after a Big Tech-led wipeout inspired by AI doubts. Focus turned to upcoming data as concerns about the economy also crept in.
Dow Jones Industrial Average futures (YM=F) traded flat, while S&P 500 futures (ES=F) slipped 0.1%, both on the heels of steep closing losses. Nasdaq 100 futures (NQ=F) fell 0.2%, coming off the worst day for the tech-heavy index since October 2022.
Stocks are running into a wall as Wall Street starts to question when tech companies’ huge investments in AI will start to pay off. Unimpressive earnings from Alphabet (GOOGL, GOOG) and Tesla (TSLA) earlier in the week have dented hopes Big Techs can live up to their AI-fueled sky-high valuations.
The fallout rippled through global stock markets, helped send Europe’s benchmark Stoxx 600 (^STOXX) down over 1%. Nikkei 225 (^N225) sank to a 3%-plus loss at the close, though a sudden yen (JPY/USD=X) gain also drove the Tokyo benchmark into technical correction.
At the same time, concerns about the robustness of the US economy are emerging as big-name earnings misses cast doubt on how consumers are holding up in the face of historically high borrowing costs.
Given that, traders are now pricing in bigger cuts by the Federal Reserve — a reduction of about 30 basis points by September, and of almost 70 basis points over 2024, according to money markets. Odds on an earlier-than-expected rate cut in July have also ticked up, CME FedWatch data showed.
Read more: 32 charts that tell the story of markets and the economy right now
A first-estimate look at second quarter GDP due later Thursday will feed into those calculations, while the Personal Consumption Expenditure Price Index update for July on Friday will provide a crucial test.
On the corporate front, Ford (F) shares tumbled over 13% in pre-market trading after the automaker posted a quarterly profit miss.
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