US index futures point to lower open Friday as crude oil surges past $100 and tech concerns weigh on Wall Street ahead of key Fed meeting and earnings.
Dow Jones, S&P 500 and Nasdaq futures are currently pointing to a lower open on Friday, with stocks likely to see further downside following the sell-off seen during Thursday’s session.
The major index futures are currently pointing to continued weakness on Wall Street in early trading on Friday, with the S&P 500 futures down by 0.4 percent.
Lingering concerns about the artificial intelligence trade are likely to weigh on the markets along with a continued increase in the price of crude oil.
U.S. crude oil futures have jumped back above $100 a barrel, while international benchmark Brent crude oil futures have reached a five-month high amid ongoing worries about supply disruptions in the Middle East.
However, traders may be reluctant to make significant moves ahead of several key events next week, including the Federal Reserve’s latest monetary policy meeting.
The Fed is scheduled to announce its latest monetary policy decision next Wednesday, with the central bank widely expected to leave rates unchanged.
With a quarter point rate hike still widely expected at the Fed’s December meeting, traders are likely to keep a close eye on the accompanying statement.
Earnings news is also likely to remain in the spotlight next week, with Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT) and Google parent Alphabet (NASDAQ:GOOGL) among the companies due to report their quarterly results.
“A combination of measured central bank guidance and strong technology results could support a recovery in risk appetite, while hawkish policy signals and disappointing earnings could trigger another round of selling,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
“With U.S. GDP and PCE inflation also due, investors will have plenty of reasons to reassess interest rate expectations,” she added. “The upcoming U.S. midterm elections on November 3 add another layer of uncertainty, suggesting volatility could remain elevated as markets head into November.”
After trending higher over the past few sessions, stocks showed a substantial move back to the downside during trading on Thursday. The tech-heavy Nasdaq led the way lower, tumbling to its lowest closing level in over a month.
The Nasdaq and S&P 500 ended the day just off their lows of the session. The Nasdaq plunged 694.00 points or 2.6 percent to 26,008.86 and the S&P 500 slumped 93.74 points or 1.2 percent to 7,663.43.
The narrower Dow, on the other hand, spent the day bouncing back and forth across the unchanged line before closing up 11.89 points or less than a tenth of a percent at 52,867.98.
The sharp pullback on Wall Street came as tech stocks came under pressure amid renewed concerns about debt-fueled AI infrastructure spending.
Traders’ level of concern about the artificial intelligence trade seems to shift on a daily basis, contributing to substantial volatility in the markets.
The latest resurgence of worries may be in reaction to comments from Nvidia (NASDAQ:NVDA) CEO Jensen Huang, who told CNBC that demand for neocloud firms like CoreWeave (NASDAQ:CRWV) is “off the charts” but “scarcity of capital” is holding back growth.
A steep drop by shares of Meta Platforms (NASDAQ:META) also weighed on the tech sector, with the Facebook parent plunging by 7.1 percent despite reporting third quarter revenues that exceeded estimates and providing upbeat guidance.
“Once people got their heads around the fact Meta needs to raise large sums to sustain its participation in the AI arms race, they lost their initial enthusiasm for the better-than-expected revenue posted by the company and the rapid take-up of its Muse AI agent,” said AJ Bell head of financial analysis Danni Hewson.
Shares of Tesla (NASDAQ:TSLA) also tumbled by 3.4 percent after surging by 3.8 percent on Wednesday even though the electronic vehicle maker reported better than expected third quarter results.
The weakness on Wall Street also came amid a notable increase in the price of crude oil, as U.S. crude oil futures jumped more than 2 percent.
U.S. crude oil futures had spiked even higher earlier in the day after President Donald Trump denied the U.S. is negotiating with Iran and said “something one way or the other” will “happen fairly soon.”
A report from the New York Times also said the U.S. and Israel have drawn up specific plans for renewed strikes on Iran after Election Day.
Semiconductor stocks turned in some of the market’s worst performances on the day, with the Philadelphia Semiconductor Index plummeting by 6.7 percent to its lowest closing level in almost three months.
A steep drop by the price of gold also contributed to substantial weakness among gold stocks, as reflected by the 5.4 percent nosedive by the NYSE Arca Gold Bugs Index.
Oil service stocks also saw significant weakness despite the jump in crude oil prices, dragging the Philadelphia Oil Service Index down by 3.7 percent.
Networking and computer hardware stocks also showed notable moves to the downside, while housing stocks soared amid a steep drop in treasury yields, resulting in a 4.6 percent spike by the Philadelphia Housing Sector Index.
Interest rate-sensitive telecom and utilities stocks also saw considerable strength, while pharmaceutical and transportation stocks benefited from a rotation out of the tech sector.