U.S. equity futures indicate a mixed opening as investors appear to return cautiously to technology stocks following two consecutive sessions of market declines. Notably, the S&P 500 and Nasdaq futures showed slight gains after the Nasdaq 100 recently experienced a significant selloff, losing over $1 trillion in market capitalization. Concerns surrounding high spending by technology giants funded through debt, in addition to expectations of a more hawkish stance from the Federal Reserve, contributed to this downturn after a surge that pushed all three major indexes to record highs.
Attention remains focused on the S&P 500 and the Nasdaq Composite as they approach key moving averages. While the S&P managed to close above its 50-day moving average, the Nasdaq Composite fell short, closing below this critical level. Market participants are keen to see if the Nasdaq can regain this support or if it will face resistance.
In a related development, oil prices have dipped more than 1%, reaching new four-month lows, primarily due to expectations that oil tankers will begin to move out of the Strait of Hormuz without incurring tolls. Oman’s announcement to keep the passage open and establish alternative routes has contributed to this shift. Lower oil prices may help ease inflation concerns and mitigate the anticipated impact of multiple rate hikes from the Fed in upcoming quarters.
Cerebras Systems reported strong earnings for the third quarter, with revenue hitting $193 million, surpassing expectations. However, the stock fell 15% ahead of Wednesday’s open due to concerns over reduced profitability in the future as the company ramps up its $20 billion contract with OpenAI. The acceleration of cloud demand from OpenAI has outpaced Cerebras’ capacity to deploy new servers, leading them to temporarily lease equipment back to OpenAI.
Micron Technology, set to release its quarterly results later today, may also experience stock price volatility given the current market sentiment. Despite a drop of over 13% in share price yesterday, Micron is still up approximately 200% quarter-to-date. Investors will be keen to hear about memory pricing and capital spending plans as they assess the company’s outlook.
FedEx reported a decline in margins in its core delivery sector, resulting in a 6% drop in shares during extended trading. Despite surpassing profit expectations, the company faced rising costs due to increased salaries, outsourced transportation, and fuel, impacting profitability. This decline underscores broader trends discussed in recent PMI reports regarding rising input costs and their transmission to consumers.
In a significant move, Alphabet, Google’s parent company, will be added to the Dow Jones Industrial Average starting Monday. This transition marks a shift toward incorporating more tech-driven companies into an index historically less vulnerable to tech volatility. Alphabet’s higher stock price will further enhance the index’s weighting compared to its predecessor, Verizon Communications.
Meta’s CEO, Mark Zuckerberg, has turned his attention to the burgeoning prediction market sector, where users can bet on various outcomes. A team has reportedly been tasked with developing a smartphone app inspired by existing platforms like Polymarket and Kalshi. This development could enhance Meta’s business by increasing ad impressions among its extensive user base.
Investors are also looking out for new economic data, including MBA mortgage applications, new home sales, crude oil inventories, and stress test results from Federal Banks. Key companies reporting today include Paychex in the morning and Micron in the afternoon, among others. The market is set for a dynamic trading day as these developments unfold.
