Nasdaq futures dropped more than 1% as chipmakers continued their slide after a strong quarter. Investors are questioning high valuations and the extensive spending on AI by companies. Significant decliners in premarket trading included Micron Technology, down 6.4% after a 15% jump in the previous session, Intel and Advanced Micro Devices, both down over 3.5%, and Nvidia, which slid 1.7%. The S&P 500 and Nasdaq were on track for sharp weekly losses, despite Micron Technology's strong earnings, due to the downturn in high-flying chipmakers.
Apple's decision to raise iPad and MacBook prices to cover increased memory and storage chip costs reignited inflation concerns. Apple shares experienced their largest one-day drop in over a year on Thursday following these price hikes. Data released on Thursday showed that U.S. inflation surpassed 4% in May for the first time in three years, driven by higher energy prices linked to the Middle East conflict, keeping open the possibility of a Federal Reserve rate hike. Persistent interest rate anxiety also contributed to market unease, with traders pricing in one 25-basis-point rate hike and a nearly 27% chance of another by year-end.
The broader market saw mixed performance among megacap and growth stocks; Tesla and Alphabet dipped, while Amazon.com and Microsoft gained. A report suggesting OpenAI might delay its public debut until next year also negatively impacted tech sector sentiment. Dow E-minis were down 124 points, or 0.24%, S&P 500 E-minis fell 38.5 points, or 0.52%, and Nasdaq 100 E-minis dropped 388 points, or 1.3%. New York Fed President John Williams indicated on Thursday that while inflation pressures are expected to moderate, they remain too high. The acquisition news of Synaptics by ON Semiconductor for approximately $7 billion in an all-stock deal saw Synaptics rise 5.8% while Onsemi dropped 13.5%.
