U.S. stock index futures are signaling a largely flat open on Wednesday, pointing to a tentative start to the session as investors digest the previous day’s losses and look for fresh direction.
Futures showed little reaction even after payroll processor ADP reported a much weaker-than-expected increase in private sector hiring for January. According to ADP, private employment rose by just 22,000 jobs last month, following a downwardly revised gain of 37,000 in December. Economists had been looking for an increase of 45,000 jobs, compared with the 41,000 initially reported for the prior month.
Despite the muted futures response, technology shares could remain under pressure after a sector rotation weighed heavily on markets in Tuesday’s session. A sharp premarket decline in Advanced Micro Devices (NASDAQ:AMD) is likely to drag on sentiment, with the chipmaker down 10.1% before the open.
AMD’s drop comes after the company reported stronger-than-expected fourth-quarter results but issued first-quarter guidance that disappointed some analysts.
In contrast, Super Micro Computer (NASDAQ:SMCI) is providing a bright spot for the sector. Shares are jumping 9.5% in premarket trading after the company delivered fiscal second-quarter results that beat expectations and lifted its full-year revenue outlook.
Stocks finished decisively lower on Tuesday, giving back gains from the prior session. All three major averages closed in negative territory, led by a pronounced selloff in technology. The Nasdaq fell 336.92 points, or 1.4%, to 23,255.19, while the S&P 500 dropped 58.63 points, or 0.8%, to 6,917.81. The Dow Jones Industrial Average declined 166.67 points, or 0.3%, to 49,240.99.
The pullback on Wall Street was largely attributed to investors rotating out of technology stocks, a trend clearly reflected in the Nasdaq’s underperformance. Software names were among the weakest, pushing the Dow Jones U.S. Software Index down 3.5% to its lowest closing level in more than nine months.
The sector’s decline came despite a strong rally in Palantir Technologies (PLTR), which surged 6.9% after the AI-focused software firm posted better-than-expected fourth-quarter results and issued upbeat guidance.
Semiconductor stocks also faced notable selling pressure, with the Philadelphia Semiconductor Index sliding 2.1%. Shares of NXP Semiconductors (NASDAQ:NXPI) fell 4.5%, even after the Dutch chipmaker topped analyst expectations on both revenue and earnings for the fourth quarter.
Outside of technology, several areas benefited from the rotation. Retail heavyweight Walmart (NYSE:WMT) jumped 2.9%, pushing its market capitalization above $1 trillion for the first time.
“It would be hard to find a better illustration of the market’s recent rotation away from tech than Walmart achieving a $1 trillion valuation for the first time,” said AJ Bell head of markets Dan Coatsworth. He added, “This bastion of Main Street joins a club which has previously only been populated by technology businesses and Warren Buffett’s Berkshire Hathaway vehicle.”
Gold-related stocks also posted strong gains, buoyed by a sharp rebound in bullion prices. The NYSE Arca Gold Bugs Index surged 4.4%.
Strength was also seen in steel, energy, and housing stocks, which helped cushion the broader market from even steeper losses.
Advanced Micro Devices stock price
Super Micro Computer stock price