Stock Index Futures Slip as Chip Selloff Resumes, Fed Speak on Tap

September S&P 500 E-Mini futures (ESU26) are down -0.51%, and September Nasdaq 100 E-Mini futures (NQU26) are down -1.18% this morning as renewed selling pressure hit the tech sector, with chipmakers leading the declines.

Chip and AI infrastructure stocks slumped in pre-market trading. Sandisk (SNDK) and Micron Technology (MU) fell over -5%, while Western Digital (WDC) dropped more than -4%. The weakness followed a selloff in Samsung Electronics and SK Hynix, which triggered a second trading halt in Seoul within days. Investors grew concerned that price hikes across products from Apple and Microsoft could weaken demand for chips and eventually slow the chip rally that has fueled much of the AI trade.

A New York Times report that ChatGPT owner OpenAI could postpone its highly anticipated initial public offering until 2027 also dampened sentiment.

Meanwhile, the price of WTI crude fell over -3% on Friday as traffic continued to move through the Strait of Hormuz despite Thursday’s attack on a container vessel. Iran said the waterway would be managed according to its agreement with the U.S. Treasuries rose across the curve as lower oil prices eased inflation concerns, with the benchmark 10-year yield falling two basis points to 4.38%.

Investors are now awaiting the final reading of the University of Michigan’s June consumer sentiment index and comments from Federal Reserve officials.

In yesterday’s trading session, Wall Street’s major indices ended mixed. Micron Technology (MU) jumped over +15% after the largest U.S. maker of computer memory chips posted upbeat FQ3 results, issued FQ4 revenue guidance that far exceeded Wall Street estimates, and said the chip shortage would extend beyond 2027. Also, Qualcomm (QCOM) rose more than +3% after the chipmaker raised its long-term non-handset revenue target and disclosed that two Big Tech companies were among its customers. In addition, Bio-Techne Corp. (TECH) soared over +20% and was among the top percentage gainers on the S&P 500 after Merck KGaA agreed to acquire the company for $11.3 billion. On the bearish side, the Magnificent Seven stocks slid, with Apple (AAPL) slumping over -6% to lead losers in the S&P 500 and Dow after the tech giant raised prices of Macs, iPads, home devices, and the Vision Pro.

“We remain constructive and believe investors should stay invested, while keeping diversification at the center of portfolio construction,” said Ulrike Hoffmann-Burchardi at UBS Chief Investment Office. “The past few months have shown how quickly narratives can shift, how costly excess cash can become when markets move higher, and how single-stock selection represents both an opportunity and a risk.”

Economic data released on Thursday were positive for equities. U.S. Q1 GDP growth was revised upward to +2.1% (q/q annualized), stronger than expectations of no change at +1.6%. Also, U.S. May personal spending rose +0.7% m/m, stronger than expectations of +0.6% m/m, and personal income grew +0.7% m/m, stronger than expectations of +0.4% m/m. In addition, the number of Americans filing for initial jobless claims in the past week fell by -12K to 215K, compared with the 225K expected. Finally, the U.S. core PCE price index, a key inflation gauge monitored by the Fed, rose +0.3% m/m and +3.4% y/y in May, in line with expectations.

Chicago Fed President Austan Goolsbee said on Thursday that he saw hopeful signs in the PCE report, but cautioned that overall price pressures remain too high. “You have seen now little bit of improvement on this services inflation, and I’ve been identifying that as something that we would want to see,” Goolsbee said. Still, he declined to say where he believes interest rates are headed, saying he agrees with Chairman Kevin Warsh on avoiding fueling speculation about the future path of rates.

New York Fed President John Williams said the current stance of monetary policy is well positioned to bring inflation back to the central bank’s 2% target, while acknowledging that risks to its dual mandate remain. Williams said inflation is “unquestionably elevated,” but added that he expects inflation readings to gradually ease in the coming quarters.

Meanwhile, U.S. rate futures have priced in a 72.2% probability of no rate change and a 27.8% chance of a 25 basis point rate hike at the next FOMC meeting in July.

Today, investors will focus on the University of Michigan’s U.S. Consumer Sentiment Index, which is set to be released in a couple of hours. Economists project that the final June figure will be revised higher to 50.0 from the preliminary reading of 48.9.

U.S. Wholesale Inventories data will also be released today. Economists forecast the preliminary May figure at +0.3% m/m, compared to +0.6% m/m in April.

In addition, market participants will be anticipating speeches from New York Fed President John Williams and Minneapolis Fed President Neel Kashkari.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.38%, down -0.30%.

The Euro Stoxx 50 Index is down -0.80% this morning as a renewed selloff in technology stocks dampened sentiment. Chip-related stocks were among the biggest losers on Friday as Apple’s decision to raise prices on many products heightened concerns that rising component costs could eventually weaken demand and slow the chip rally that has driven much of the AI trade. A report that OpenAI could postpone its initial public offering also weighed on sentiment. Energy stocks also slumped as oil prices fell, with traffic continuing to flow through the Strait of Hormuz. In addition, bank stocks slid. The benchmark index is on track to post a weekly loss. A European Central Bank survey released on Friday showed that Eurozone consumers lowered their near-term inflation expectations in May while keeping their longer-term inflation expectations unchanged. That could reassure ECB policymakers who worry that the energy shock triggered by the Iran war could lead to more persistent second-round inflationary effects, such as stronger wage demands. Separately, data showed that Italy’s consumer confidence index slipped back in June. In corporate news, Zalando (ZAL.D.DX) slid over -5% after Germany’s financial regulator said it had launched an audit of the company’s financial statements, alleging that it may have failed to disclose a transaction related to its acquisition of About You.

Italy’s Consumer Confidence data was released today.

The Italian June Consumer Confidence came in at 92.4, weaker than expectations of 94.5.

Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -2.26%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -4.15%.

China’s Shanghai Composite Index closed sharply lower today, dragged down by weakness in the tech sector. AI-related stocks tumbled on Friday, tracking losses in their Asian peers as an overnight selloff in Apple’s shares and a report that OpenAI could postpone its initial public offering weighed on sentiment. Non-ferrous metal and liquor stocks also slumped. The Shanghai Composite Index posted its biggest daily decline in three months. The benchmark also recorded a weekly loss. Meanwhile, Reuters reported on Friday that China’s central bank had instructed some commercial banks to boost their lending this month, the latest indication that credit demand remains weak as the economy grapples with soft domestic consumption. In other news, China’s state media reported that the country is preparing new legal measures to push back against overseas economic pressure, raising risks for foreign companies operating in the world’s second-largest economy. Investor attention is now squarely on China’s industrial profit data for May, scheduled for release over the weekend.

Japan’s Nikkei 225 Stock Index closed sharply lower today, retreating from a record high as the tech sector came under renewed pressure. Sentiment soured as investors assessed developments, including Apple’s product price hikes driven by a shortage of memory chips and a report that OpenAI could delay its initial public offering. SoftBank Group sank over -12% after the New York Times reported that OpenAI was inclined to postpone its IPO until 2027, delaying potential returns for the tech investor. “The news was negative for SoftBank Group as well as overall investors, as AI is the centre of the market and the market wondered if there was anything negative in the industry outlook,” said Shuutarou Yasuda at Tokai Tokyo Intelligence Laboratory. Other AI-related heavyweights also slumped, with Kioxia Holdings tumbling over -11% and Advantest dropping more than -9%. The benchmark index notched a weekly loss. Meanwhile, government data released on Friday showed that annual core inflation in the Tokyo metropolitan area accelerated in June for the first time in eight months, signaling broadening price pressures stemming from the Middle East conflict. Barclays economists said the data appears consistent with the Bank of Japan’s projections, keeping the door open for an interest-rate hike in October followed by another in April 2027. In other news, TBS reported on Friday that the Japanese government plans to finance a proposed reduction in the national sales tax on food items through measures such as reviewing subsidies rather than issuing deficit-covering bonds. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +7.64% to 33.12.

The Japanese June Tokyo Core CPI rose +1.6% y/y, in line with expectations.

Pre-Market U.S. Stock Movers

Chip and AI infrastructure stocks slid in pre-market trading, with Sandisk (SNDK) and Micron Technology (MU) falling over -5%.

ON Semiconductor (ON) tumbled more than -15% in pre-market trading after agreeing to acquire Synaptics in an all-stock deal valued at around $7 billion. At the same time, Synaptics (SYNA) climbed over +6%.

CoreWeave (CRWV) fell over -2% and Oracle (ORCL) dropped more than -1% in pre-market trading after the New York Times reported that OpenAI could postpone its initial public offering.

Nike (NKE) slipped about -0.8% in pre-market trading after KeyBanc downgraded the stock to Sector Weight from Overweight.

FuelCell Energy (FCEL) rose more than +4% in pre-market trading after Jefferies upgraded the stock to Buy from Hold with a price target of $24.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - June 26th

Apogee Enterprises (APOG).