S&P, Dow Futures Steady as MidEast Deal Takes Focus
AI-linked memory stocks Western Digital and Sandisk tumbled in premarket trading after huge gains this year, while oil held near US$80 amid talk of an Iran-US deal.
S&P 500 and Dow Jones futures held steady as investors turned their attention to diplomatic developments in the Middle East, while artificial intelligence-linked stocks showed signs of cooling from a sustained rally.
At 7.05am, Dow E-minis were up 124 points, or 0.23%, S&P 500 E-minis were up 4.5 points, or 0.06%, and Nasdaq 100 E-minis were down 225.25 points, or 0.76%.
Data storage company Western Digital lost 15.5% and memory chip maker Sandisk dropped 10.1% in premarket trading, after having shot up 200% and 400% respectively this year. Both companies had forecast quarterly revenue above expectations, betting on strong AI-driven demand.
"Expectations (for Western Digital) got priced for outright acceleration (not just continued strength)," said Luke Lango, chief technology analyst at financial research firm InvestorPlace.
"When the growth and margin trajectory came in 'merely' excellent rather than re-accelerating, an extremely crowded, high-momentum stock got dumped alongside the broader AI-memory complex that's been unwinding all week," Lango said.
Other chip stocks also fell, with Micron shedding 4.6%, while Advanced Micro Devices, Marvell Technology and Intel each lost over 1%. Software stocks were broadly lower, with Atlassian, Salesforce, Adobe and Zscaler all down sharply following earnings reports in the sector. AppLovin dropped 18.7% after missing Wall Street estimates for quarterly revenue, while cloud security firm Datadog lost 22.3% after its second-quarter results.
Megacaps Meta and Amazon were marginally higher, Alphabet rose about 0.5% a day after dropping 4% on an announced leadership overhaul of its AI division, and Apple gained 0.8%. SpaceX rose 1.5% ahead of its first post-IPO share lockup expiry. Moderna added 3.9% after the US Food and Drug Administration approved its flu vaccine for people aged 50 and older.
Brent crude traded in a tight range near US$80 a barrel as markets watched for signs of a deal between Iran and the US. A proposed deal between Iran and Oman would give Tehran control over ships entering the Gulf through the Strait of Hormuz, sources told Reuters.
The Federal Reserve has been keen on the outlook for energy costs, with most central bankers saying they were prepared to act if price pressures increase. St Louis Fed president Alberto Musalem is due to speak on monetary policy later in the day, while chairman Kevin Warsh has stayed mum on forward guidance. Probabilities for no change versus a rate hike in September are now closer to even, the CME FedWatch Tool showed, against 37% versus 63% last week.
A weekly jobless claims report is due later, ahead of July non-farm payrolls on Friday.
This article was produced with the assistance of artificial intelligence (AI), in accordance with our editorial policy.