The U.S. stock index futures took a hit as chip stocks faced downbeat results in premarket trading. Advanced Micro Devices (AMD) saw a decrease of 6.3% after its forecast for AI chip sales failed to meet investor expectations. Similarly, Super Micro Computer (SMCI) lost 9.1% as the artificial intelligence server maker reported third-quarter revenue below estimates. This downward trend extended to other chipmakers, with Nvidia and Micron Technology also experiencing declines of more than 2% each.
The markets exercised caution as they awaited more economic data and the Federal Reserve’s interest rate decision. The previous day’s data showing a rise in labor costs and deteriorating consumer confidence dampened rate-cut expectations. Investors were keen on assessing the state of inflation in the U.S. economy before the Fed’s interest rate decision at the end of its two-day meeting.
A series of economic data releases were scheduled for the day, including the ADP National employment numbers for April, April S&P Global final manufacturing PMI data, ISM manufacturing PMI data, and JOLTS job openings figures. Market analysts were anticipating the confirmation that the Fed might be one of the last central banks to cut rates this cycle. Money markets were pricing in minimal rate cuts for the year, signaling a shift in expectations from earlier in the year.
April was a challenging month for U.S. equities due to a sharp pullback in rate cut bets and tensions in the Middle East. The stock indexes posted their first monthly loss in six months. The focus for May would be on the rest of the first-quarter earnings season and the evolving interest rate outlook. Historically, the market has seen a dip in performance between May and October compared to the period between November and April, leading to the popular saying “Sell in May and Go Away.”
Starbucks faced a 12% drop in premarket trading as the coffee giant revised its annual sales forecast following a decline in same-store sales for the first time in nearly three years. On the other hand, Pinterest surged by 18% after the social media firm forecasted second-quarter revenue above Wall Street estimates.
The impact of chip stocks, economic data, and the Federal Reserve’s interest rate decision were significant factors influencing U.S. stock index futures. Market participants remained cautious amidst uncertainties to gauge the state of the economy and potential rate cuts. Individual stock movements added to the volatility in the pre-market trading session, highlighting the importance of monitoring key indicators and trends in the market.
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