U.S. stock futures pointed to another negative open on Thursday, suggesting markets will extend the losses recorded over the last two sessions.
Investors remain uneasy about the near-term outlook for the artificial intelligence sector, with Nvidia (NASDAQ:NVDA) and Oracle (NYSE:ORCL) dragging sentiment lower. Both companies were under pressure in pre-market trading, with Nvidia down 1.2% and Oracle sliding 3.5%.
Futures weakened further after the release of stronger-than-expected U.S. economic reports. The Labor Department announced that weekly jobless claims fell by 14,000 to 218,000 for the week ending September 20, compared with the prior week’s revised figure of 232,000. Economists had anticipated a slight increase to 235,000.
The surprising drop has sparked concerns that a resilient labor market could reduce the Federal Reserve’s incentive to keep cutting rates.
Adding to the data flow, the Commerce Department said U.S. durable goods orders surged 2.9% in August, reversing a revised 2.7% drop in July. Economists had predicted another decline of 0.5%.
Attention now turns to Friday, when the Commerce Department will publish its report on personal income and spending, including the Fed’s closely watched inflation gauge.
Recent Market Moves
After Tuesday’s selloff, stocks came under renewed pressure on Wednesday. Although the major averages opened without clear direction, losses deepened throughout the session before easing slightly into the close.
The Dow Jones Industrial Average fell 171.50 points, or 0.4%, to 46,121.28. The Nasdaq dropped 75.62 points, or 0.3%, to 22,497.86, while the S&P 500 slipped 18.95 points, or 0.3%, to finish at 6,637.97.
Nvidia declined 0.9% on Wednesday, adding to Tuesday’s 2.8% loss, while Oracle dropped another 1.7%.
Valuation and Policy Uncertainty
Investor caution also reflected concerns about equity valuations after Federal Reserve Chair Jerome Powell reiterated a cautious tone. At an event in Rhode Island on Tuesday, Powell described stock prices as “fairly highly valued” following their surge to record levels.
He also warned that policymakers face a difficult balancing act:
- Powell noted there is “no risk-free path” on rates.
- He cautioned that cutting rates too quickly could “leave the inflation job unfinished.”
- At the same time, keeping rates elevated for too long could create “unnecessarily” weak labor market conditions.
Powell described the current environment as a “challenging situation,” with upside risks to inflation but downside risks to employment.
Sector Watch
Technology hardware names bore the brunt of selling on Wednesday, with the NYSE Arca Computer Hardware Index tumbling 2.3% after reaching a record close the day before.
Gold mining shares also struggled as bullion prices retreated, sending the NYSE Arca Gold Bugs Index down 2.2%. Airline stocks weakened as well, with the NYSE Arca Airline Index falling 1.6%.
Networking, telecom, and brokerage firms saw additional downside, while energy stocks bucked the trend, buoyed by another rally in crude oil.
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