Pre-Market Update: S&P 500 and Nasdaq Eye Rebound After AI Stock Selloff

TLDR

• Nasdaq 100 futures rose 0.5% and S&P 500 futures added 0.1% Wednesday after a brutal Tuesday selloff
• The Nasdaq dropped more than 3% Tuesday as Wall Street sold off AI-linked stocks
• Micron earnings due after the bell Wednesday will be a key test for AI demand sentiment
• Cerebras shares dropped over 10% in premarket after forecasting weaker profit margins than rivals
• Bitcoin slipped 0.3% to $62,620 as broader risk sentiment remained cautious

Wall Street is looking for a recovery on Wednesday after one of the worst days of the year for tech stocks. Futures point higher, but investors are cautious ahead of a big earnings report.

Nasdaq 100 futures climbed 0.5% in early trading. S&P 500 futures added 0.1%. Dow Jones futures slipped 83 points, or 0.2%.

Tuesday was painful for tech investors. The Nasdaq fell more than 3% as traders dumped AI-related stocks across the board. The S&P 500 also dropped, closing down 1.44%.

The selloff was not limited to the US. South Korea’s KOSPI index tumbled 10% on Tuesday, dragged down by chip stocks. It bounced back 3.3% on Wednesday, led by Samsung Electronics.

Micron Earnings in Focus

All eyes are now on Micron, whose results are due after the closing bell Wednesday. The memory chip maker has been one of the big winners of the AI boom, with its stock rising more than 250% this year.

But on Tuesday, Micron shares fell 13% as the broader tech selloff hit hard. Investors are watching its earnings closely for clues about real AI hardware demand.

Cerebras, the AI chipmaker that went public in May, reported its first earnings Tuesday evening. Its shares fell more than 10% in premarket after it forecast profit margins below those of rivals like Nvidia.

Rick Gardner, chief investment officer at RGA Investments, said many tech stocks had become overstretched. “When stocks rise too much and too fast, a pullback almost always ensues,” he said.

Gardner described the selloff as a “recalibration of expectations,” pointing to high earnings forecasts heading into July’s earnings season.

Markets and Macro Backdrop

Outside of tech, FedEx reported after hours and cited rising transportation costs and shifting trade policy for shrinking operating margins. FedEx is widely seen as a bellwether for the broader economy, and its shares slid in premarket trading.

Oil prices continued to fall. Brent crude slipped 1% to $76.01 a barrel. West Texas Intermediate fell 1.1% to $72.38. Investors are betting that oil flows through the Strait of Hormuz will resume.

The US dollar edged up 0.1% against a basket of currencies. The yield on the 10-year Treasury note dipped 2 basis points to 4.49%.

Bitcoin fell 0.3% to $62,620 over the past 24 hours. The crypto tends to track broader risk sentiment, and the cautious mood weighed on prices.

Concerns about high valuations, heavy AI spending, and the possibility of coming interest rate hikes are driving profit-taking in high-growth tech names.

Micron’s earnings report Wednesday evening will likely set the tone for the rest of the week.

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