Tech Stocks May Lead Extended Pullback On Wall Street
(RTTNews) - Stocks are likely to move to the downside in early trading on Thursday, extending the steep drop seen in the previous session. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.3 percent.
Continued weakness among technology stocks is likely to weigh on Wall Street, as reflected by the 1.2 percent slump by the tech-heavy Nasdaq 100 futures.
The downward momentum for tech stocks comes amid renewed concerns about the outlook for the artificial intelligence trade.
"Tech investors are getting uncomfortable with the amount of debt being used to fund the AI build-out," said Dan Coatsworth, head of markets at AJ Bell. "There is a growing fear that big names in the tech space are running too fast, and they're primed to trip up."
He added, "Reports about Anthropic's third quarter revenue suggest it isn't growing as fast as expected, which added to fears that the AI euphoria might be hard to sustain."
Negative sentiment may also be generated in reaction to a Labor Department report showing producer prices in the U.S. shot up by much more than expected in the month of September.
The Labor Department said its producer price index for final demand jumped by 1.3 in September after rising by an upwardly revised 0.5 percent in August.
Economists had expected producer prices to climb by 0.5 percent compared to the 0.4 percent increase originally reported for the previous month.
The report also said the annual rate of growth by producer prices surged to 6.3 percent in September from an upwardly revised 5.6 percent in August.
The annual rate of growth was expected to hold steady at the 5.4 percent originally reported for the previous month.
Following yesterday's hotter-than-expected consumer price inflation report, the data is likely to add to concerns about the outlook for interest rates.
After ending Tuesday's choppy trading day modestly lower, stocks showed a more significant move to the downside during trading on Wednesday. The tech-heavy Nasdaq saw a particularly steep drop on the day.
The major averages climbed off their worst levels going into the end of the day but still closed in the red. The Nasdaq tumbled 511.51 points or 1.9 percent to 26,692.87 and the S&P 500 slumped 86.51 points or 1.1 percent to 7,7718.94.
In overseas trading, stock markets across the Asia-Pacific region moved notably lower on Thursday. South Korea's Kospi plummeted by 7.6 percent, Japan's Nikkei 225 Index tumbled by 4.9 percent and China's Shanghai Composite Index slumped by 1.6 percent.
Meanwhile, the major European markets are turning in a mixed performance on the day. While the German DAX Index is down by 0.3 percent, the French CAC 40 Index is up by 0.4 percent and the U.K.'s FTSE 100 Index is up by 0.8 percent.
In commodities trading, crude oil futures are edging down $0.01 to $95.08 a barrel after jumping $0.95 to $95.09 a barrel on Wednesday. Meanwhile, after slumping $69.40 to $4,107.90 an ounce in the previous session, gold futures are surging $66.90 to $4,174.80 an ounce.
On the currency front, the U.S. dollar is trading at 157.92 yen versus the 158.31 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1201 compared to yesterday's $1.1156.
