U.S. index futures point to a sharply lower open on Thursday as investors take profits from Tesla, Meta, and IBM following earnings, alongside growing AI capital spending concerns.
Dow Jones, S&P 500 and Nasdaq futures are currently pointing to a sharply lower open on Thursday, with stocks likely to give back ground after trending higher over the past few sessions.
Traders may look to cash in on yesterday’s rally by tech stocks amid a negative reaction to earnings news from mega-cap companies Tesla (NASDAQ:TSLA) and Meta Platforms (NASDAQ:META).
Shares of Tesla are tumbling by 3.6 percent in pre-market trading after surging by 3.8 percent on Wednesday even though the electronic vehicle maker reported better than expected third quarter results.
Facebook parent Meta Platforms is also slumping by 2.7 percent in pre-market trading despite reporting third quarter revenues that exceeded estimates and providing upbeat guidance.
Shares of IBM Corp. (NYSE:IBM) are also plunging by 16.5 percent in pre-market trading even though the tech giant reported third quarter results that beat expectations.
Lingering concerns about debt-fueled AI infrastructure spending may contribute to an initial pullback by tech stocks.
In an interview with CNBC, Nvidia (NASDAQ:NVDA) CEO Jensen Huang said demand for neocloud firms like CoreWeave (NASDAQ:CRWV) is “off the charts” but “scarcity of capital” is holding back growth.
After fluctuating early in the session, stocks moved mostly higher over the course of the trading day on Wednesday. The major averages all moved to the upside, with the tech-heavy Nasdaq showing a notable advance.
The major averages saw some volatility late in the session but closed firmly in positive territory. The Nasdaq jumped 278.04 points or 1.1 percent to 26,702.86, the Dow climbed 360.21 points or 0.7 percent to 52,856.09 and the S&P 500 rose 44.60 points or 0.6 percent to 7,757.17.
The advance by the Nasdaq reflected strength in the tech sector amid a positive reaction to some of the latest earnings news.
Shares of SpaceX (NASDAQ:SPCX) spiked by 7.7 percent after the Elon Musk-led rocket company reported better-than-expected third quarter earnings as revenues skyrocketed.
Musk also confirmed SpaceX and Tesla have formed independent special committees to explore a potential merger. Shares of Tesla jumped by 3.8 percent.
Data center server company Super Micro Computer (NASDAQ:SMCI) also soared by 9.3 percent after boosting its fiscal first-quarter revenue outlook.
On the other hand, shares of Netflix (NASDAQ:NFLX) tumbled by 5.3 percent after the streaming giant reported better than expected third quarter earnings but provided disappointing revenue guidance.
Telecom giant AT&T (NYSE:T) also plunged by 6.3 percent despite reporting third quarter results that beat expectations on both the top and bottom lines.
Computer hardware saw substantial strength on the Super Micro Computer news, with the NYSE Arca Computer Hardware Index surging by 2.5 percent.
Significant strength was also visible among oil service stocks, as reflected by the 2 percent jump by the Philadelphia Oil Service Index.
Semiconductor, networking and banking stocks also saw notable strength, while the steep drop by AT&T weighed on the telecom sector.