By Shashwat Chauhan and Joel Jose
June 26 (Reuters) – Futures tied to the tech-heavy Nasdaq led Wall Street losses on Friday as chip stocks came under renewed pressure, while some megacap technology names also edged lower as AI worries persisted.
U.S. equities are heading into the close of a volatile week marked by erratic sentiment surrounding technology stocks, as investors weigh elevated AI-driven valuations and growing uncertainty over how soon heavy data-centre investments would yield profits.
Chip stocks — among the biggest winners of this year’s AI rally — remained under pressure through the week, briefly finding some relief after memory chipmaker Micron’s robust quarterly forecast before coming under renewed selling pressure on Friday.
Micron Technology shed 5.4% in premarket trading after jumping more than 15% in the previous session. Intel and Advanced Micro Devices were also down over 3.5% each and Nvidia slid 1%.
Apple shares were steady after dropping over 6% on Thursday when it raised prices on some products due to soaring memory and storage chip costs.
Megacap and growth stocks were mixed, with Tesla and Alphabet edging lower while Amazon.com and Microsoft were on the rise.
“With valuations elevated and the Fed maintaining a cautious stance, investors are becoming increasingly discerning about where they deploy capital,” said Daniela Hathorn, senior market analyst at Capital.com.
A report that OpenAI was considering delaying its public debut until next year also weighed on risk sentiment towards the tech space.
“This move would be heavy with symbolism given the company essentially kicked off the whole AI theme in earnest with the launch of ChatGPT in 2022,” said Danni Hewson, head of financial analysis at AJ Bell.
The benchmark S&P 500 ended flat in the previous session as losses in Big Tech were offset by gains in industrials, healthcare and materials.
Recent market volatility has driven investors toward overlooked sectors poised to benefit from easing inflation concerns and stronger growth prospects.
Cooling tensions in the Middle East have further helped lift the blue-chip Dow to record highs.
As of last close, the S&P 500 and the tech-heavy Nasdaq were on pace for steep weekly losses while the Dow was set for mild advances.
Shares of Elon Musk’s SpaceX, which debuted earlier this month, were down 1.7% in choppy trading.
Investors expect heavy trading volume on Friday to reflect changes to the Russell indexes, including reclassification for megacaps like Microsoft and the Russell 1000’s “fast-track” addition of SpaceX.
At 6:58 a.m. ET, Dow E-minis were down 59 points, or 0.11%, and S&P 500 E-minis were down 38 points, or 0.51%. Nasdaq 100 E-minis were down 371 points, or 1.25%.
Meanwhile, interest rate anxiety persisted, with traders pricing in one 25-basis-point rate hike and a near-27% chance of another by year-end, according to LSEG-compiled data.
New York Fed President John Williams said on Thursday that while inflation pressures are likely to moderate this year, they remain too high. Data on Thursday showed U.S. inflation increased further in May.
A final reading of June consumer sentiment is due later in the day, while the monthly jobs report is due next week.
Synaptics rose 4.2% after ON Semiconductor said it has agreed to acquire the company in an all-stock deal valued at about $7 billion. Onsemi dropped 14.1%.
(Reporting by Shashwat Chauhan and Joel Jose in Bengaluru; Editing by Joyjeet Das)
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