Chip Stocks Weigh on Futures; Investors Cautious Ahead of Fed Decision

Markets Brace for Economic Data Releases Amid Chip Sector Turbulence

May 1, 2024 - 08:00
May 1, 2024 - 08:01
Chip Stocks Weigh on Futures; Investors Cautious Ahead of Fed Decision
Chip Stocks Weigh on Futures; Investors Cautious Ahead of Fed Decision

U.S. stock futures took a dip on Wednesday, with chip stocks leading the downward trend. The drop comes as investors tread carefully before major economic updates and the Federal Reserve's upcoming decision on interest rates.

Before the market opened, Advanced Micro Devices (AMD) and Super Micro Computer both faced losses. AMD's projection for AI chip sales didn't meet expectations, causing its stock to slide by 6.7%. Similarly, Super Micro Computer saw an 11.5% decrease in its stock value after reporting lower-than-expected revenue for the third quarter.

This downward trend affected other chip stocks too, including Nvidia and Micron Technology, which both saw declines of over 1%.

However, stood out with a 2.2% increase after reporting better-than-anticipated quarterly results, largely thanks to the growing demand for artificial intelligence and cloud computing services.

Investors are now waiting for several economic indicators throughout the day to gauge the state of inflation in the U.S. economy. These include the ADP National employment numbers for April, the April S&P Global final manufacturing PMI data, the ISM manufacturing PMI data, and the JOLTS job openings figures.

Brendan Murphy, head of global fixed income, North America, at Insight Investment, noted a potential shift in expectations regarding Fed rate cuts, suggesting that the upcoming FOMC meeting might signal a change in the global economic landscape.

Market expectations regarding rate cuts have decreased significantly compared to earlier projections.

April was a tough month for U.S. equities due to diminishing rate cut expectations and tensions in the Middle East. All three major stock indexes posted their first monthly losses in six months.

As May begins, investors are bracing for continued challenges as the first-quarter earnings season progresses and the interest rate outlook becomes clearer.

At 07:00 a.m. ET, Dow E-minis were down 87 points, S&P 500 E-minis were down 20.25 points, and Nasdaq 100 E-minis were down 109.25 points.

In other market news, Starbucks saw a sharp decline of 12.8% after revising its annual sales forecast downward following a drop in same-store sales. CVS Health also faced challenges, experiencing a 10.7% decrease after revising its annual profit forecast and missing Wall Street's first-quarter earnings estimates.

Also Read: Apple Loses Ground in Chinese Smartphone Market in Q1 2024

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