US Equity-Index Futures Slip as Investors Await Economic Data and Fed Policy Clues
Title: Tech Giants Slip as Micron’s Sales Forecast Disappoints, Fed Policy in Focus
In a volatile market environment, US equity-index futures dipped as investors awaited crucial economic data that will influence Federal Reserve policy. Micron Technology Inc.’s disappointing sales forecast weighed heavily on tech giants, leading to premarket losses for the sector.
As traders keep a close eye on reports on economic growth and weekly unemployment claims, the focus remains on tomorrow’s key inflation figures following Fed Governor Michelle Bowman’s remarks on interest rate cuts. Treasury yields held steady after a recent rise, while the dollar remained near an eight-month high.
Andrew Brenner, head of international fixed income at NatAlliance Securities LLC, highlighted the impact of the Fed’s stance on rates, stating, “It’s all about the Fed — higher for longer is keeping the front end of rates very high, drawing money into the US and keeping the dollar strong.”
Micron’s underwhelming outlook underscored the risks associated with relying on artificial intelligence chip makers to drive the stock rally. The company’s shares plummeted up to 8% in premarket trading, dragging down other tech giants like Nvidia Corp.
The month of June has been particularly turbulent for Big Tech stocks, with the likes of Nvidia, Microsoft Corp., Amazon.com Inc., Meta Platforms Inc., and Apple Inc. accounting for a significant portion of the S&P 500’s gains this year. Micron, a beneficiary of the AI stock frenzy, saw its shares double in the previous year but faced market backlash for not surpassing lofty expectations.
In a further indication of investor apprehension towards market concentration, hedge funds aggressively sold tech stocks in June, particularly semiconductor and semiconductor equipment companies. This trend coincided with Nvidia briefly becoming the world’s largest company.
In other market movements, International Paper Co. shares tumbled after Suzano SA abandoned its pursuit of the US paper and packaging company. Meanwhile, Walgreens Boots Alliance Inc. saw a decline in share value after cutting its profit forecast due to challenging consumer conditions.
Over in Europe, Hennes & Mauritz AB experienced a sharp decline in stock price following an earnings miss, while GSK Plc faced regulatory setbacks for its RSV vaccine. Kering, the owner of Gucci, received a boost after a double-upgrade from Bank of America Corp.
The Stoxx Europe 600 index extended losses after comments from European Central Bank Governing Council member Martins Kazaks suggested that strong wage growth was impeding rate reductions. Money supply in the euro region exceeded expectations in May, fueled by credit growth.
Across Asia, stocks in Japan, Hong Kong, South Korea, and China declined, with the MSCI Asia Pacific gauge heading for its first loss in three days. Chinese stocks faced pressure, with the MSCI China Index on track for a technical correction ahead of a key meeting of the country’s top leaders in July.
In the commodities market, gold stabilized after a two-day decline, while oil traded within a narrow range awaiting US economic data. Iron ore prices held steady amid signs of increased Chinese demand following property measures in major cities.
Key events to watch this week include US durable goods, initial jobless claims, GDP, and Nike earnings. The market landscape is likely to be influenced by upcoming data releases and Fed speeches as investors navigate evolving economic conditions.
This news story was produced with the assistance of Bloomberg Automation and contributions from Michael Msika, Richard Henderson, and Divya Patil.
Source: Bloomberg Businessweek, ©2024 Bloomberg L.P.