U.S. stock index futures showed little movement Thursday as investors took a step back following two consecutive days of gains, while semiconductor stocks continued to face selling pressure ahead of new economic data and another round of quarterly earnings reports.
Chip stocks extended their slide from the previous session, when investors shifted money into large-cap technology companies and bank stocks after major lenders posted strong results.
U.S.-listed shares of TSMC dropped 3.2% in premarket trading, despite the advanced AI chipmaker reporting a 77% surge in second-quarter profit that beat analyst expectations. The company also announced plans to invest an additional $100 billion in the United States.
Memory chip companies were among the hardest hit, with Western Digital and Seagate Technology falling 3.9% and 3.3%, respectively.
Wall Street’s major indexes posted gains for the second day in a row on Wednesday after a Producer Price Index reading came in lower than expected, calming concerns about inflation and reducing fears that the Federal Reserve might tighten monetary policy further. That report came on the heels of similarly mild consumer inflation data released earlier in the week.
A strong start to the second-quarter earnings season also helped boost investor confidence, even as tensions between the U.S. and Iran continued to simmer in the background.
Mark Haefele, chief investment officer at UBS Global Wealth Management, offered this perspective: “While geopolitical dynamics may trigger setbacks, earnings should remain the key driver of performance for the remainder of the year.”
He added, “In fact, with the U.S. second-quarter earnings season kicking off with solid beats, we expect another strong set of results in the coming weeks.”
As of 5:18 a.m. ET, Dow E-minis were off 9 points, or 0.02%, while S&P 500 E-minis slipped 1 point, or 0.01%. Nasdaq 100 E-minis were down 63.75 points, or 0.21%.
Later in the morning, investors will be closely watching retail sales figures and weekly jobless claims, due out at 8:30 a.m. ET, for clues about whether the economy is cooling enough to keep inflation in check without raising concerns about slowing growth.
According to CME’s FedWatch tool, markets are currently placing a 10.2% probability on the Fed raising interest rates by 25 basis points at its upcoming policy meeting this month.
The benchmark S&P 500 has climbed more than 10% so far this year and is still hovering near its record close from June, making the rally susceptible to any disappointing economic or earnings news.
United Airlines shares slipped 2.3% after a renewed rise in oil prices cast a shadow over the airline’s profit outlook for both the third quarter and the full year.
On the earnings front, UnitedHealth is set to release its results before the opening bell, while Netflix is scheduled to report after markets close for the day.
