Contracts tracking the tech-heavy Nasdaq fell the most, with personal computer maker Dell and chipmaker Marvell down 6.4% and 14% after their quarterly forecasts missed expectations.
Nvidia lost nearly 2% in premarket trading, a day after the AI chip leader’s dour China market expectations jolted investors accustomed to blockbuster forecasts from the company.
Still, strength in its overall results and bullish comments from CEO Jensen Huang calmed worries of an imminent slowdown in demand for artificial intelligence (AI) infrastructure, boosting other AI-related stocks, megacaps and chip companies.
That helped the S&P 500 and the blue-chip Dow close at record highs yesterday.
The benchmark index and the Nasdaq were on track for their fourth straight month of gains.
The focus now shifts to a report on the Fed’s preferred inflation gauge – the personal consumption expenditures index (PCE) – expected at 8.30am.
Economists polled by Reuters expect the index to stay steady at 2.6% in July from the month before.
Excluding volatile items like food and energy, however, it is expected to rise 2.9%, up from 2.8% in June.
“Recent inflation developments offer little reassurance,” said Seema Shah, chief global strategist for Principal Asset Management.
“While July’s inflation report wasn’t alarmingly strong, underlying signals point to building price pressures amid higher trade tariffs,” Shah said.
At 7:04am, Dow E-minis were down 150 points, or 0.33%, S&P 500 E-minis were down 21.5 points, or 0.33%, and Nasdaq 100 E-minis were down 125.75 points, or 0.53%
Traders are pricing in an 84.2% chance that the Fed could lower borrowing costs by 25 basis points in its September meeting, according to data compiled by LSEG, further anchored by chair Jerome Powell’s dovish comments at Jackson Hole where he acknowledged labour market weakness.
Late yesterday, governor Christopher Waller, a candidate for the central bank’s top job, said he wants to start cutting rates next month.
Still, some analysts have said overall data suggests a resilient economy with little signs of US tariffs fully filtering through into prices yet.
Today, however, the US tariff exemption for package imports valued under US$800 ended, raising costs for businesses and, in turn, consumers.
Attention this week was also on US President Donald Trump’s tussle with the central bank.
Governor Lisa Cook filed a motion that declared Trump’s effort to fire her was unlawful and seeks to bar the Fed from taking steps to remove her pending further litigation.
A hearing on the motion is due at 10am.
Long-term Treasury bond yields rose on worries that a politically influenced Fed could reduce the credibility of US debt.
Bond yields move inversely to prices and higher yields weigh on riskier stocks.
Among others, global economy bellwether Caterpillar lost 2.6% after raising its annual estimate for tariff-related costs.
Celsius Holdings rose 6.6% after a report said PepsiCo was increasing its stake in the energy drink maker through a US$585 million deal.