Wall St futures slump after rally as tech stocks slide

[July 17, 2024]  (Reuters) - U.S. stock index futures slid on Wednesday, with those tracking the Nasdaq 100 dropping over 1% as investors sold off megacap tech and chip shares and piled into lagging areas of the market such as small-cap stocks. Megacaps such as Apple, Microsoft and Alphabet slumped in premarket trading, dropping between 0.7% and 1.5%.

Shares of semiconductor companies also fell, with AI-chip favorite Nvidia sliding 3.1% and ASML dropping 6.3% after a report that the Biden Administration was weighing severe trade restrictions in a crackdown on Chinese chips.

Elsewhere, U.S.-listed shares of Taiwan Semiconductor Manufacturing were down 3.5% after Republican presidential candidate Donald Trump said Taiwan should pay the U.S. for its defense.

However, futures tracking the small-cap Russell 2000 rose 0.2%. The index has rallied over the past five sessions as investors have shifted focus away from the banner growth in technology companies to underperforming areas of the market, on the back of growing bets that the Federal Reserve is nearing the start of monetary policy easing.

The Dow Jones Industrial Average and the S&P 500 also hit all-time closing highs on Tuesday.

Trade Nation senior market analyst David Morrison also cited profit-taking as a likely cause for Wednesday's dip in futures.

"It could be the rally has been running on fumes recently... what we're seeing now is a generalized pullback, which is totally consistent with consolidation and profit-taking after hitting record highs in the major indices," Morrison said.

Firmer bets on a Fed rate cut in September as well as rising expectations that former President Donald Trump will be back in the White House in November after the assassination attempt have helped lift stocks over the past few sessions.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., July 3, 2024. REUTERS/Brendan McDermid/File Photo

Investors will focus on comments from Fed officials Thomas Barkin and Christopher Waller later in the day for clues on how policymakers have assessed recent inflation, employment and retail sales data.

Corporate earnings are also in focus, with Johnson & Johnson and Northern Trust among those scheduled to report before the bell.

On the economic data front, housing starts and industrial production data for June are also on deck.

At 5:35 a.m. ET, Dow e-minis were down 76 points, or 0.18%, S&P 500 e-minis were down 41.5 points, or 0.73%, and Nasdaq 100 e-minis were down 255 points, or 1.24%.

Among single movers, trucking firm JB Hunt Transport Services fell 3.0% on reporting a 24% drop in second-quarter profit after markets closed on Tuesday.

Spirit Airlines slumped 5.7% after the company lowered its second-quarter revenue outlook, citing lower-than-expected non-ticket revenue.

(Reporting by Lisa Mattackal in Bengaluru; Editing by Pooja Desai)

[© 2024 Thomson Reuters. All rights reserved.]
This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.