U.S. stock futures showed mixed signals early Wednesday, with technology shares attempting a rebound after two consecutive sessions of selling. Nasdaq 100 futures gained 0.41% by 5:40 a.m. EDT, while S&P 500 futures edged up 0.09%. Dow futures slipped 0.16%, reflecting ongoing caution among investors.
The technology sector, which has been under pressure due to mounting concerns over the sustainability of AI-related spending, saw some relief as Micron Technology (NASDAQ:MU) led premarket gains. The memory chipmaker's stock rose 3.8% ahead of the bell, recovering slightly from a 13% plunge in the prior session. Investors are now closely watching Micron's earnings report, scheduled for release after the market close, for signals on whether AI-driven demand can justify the sector's elevated valuations.
"I think people are going to get the blowout quarter that they expect, but I don't expect the stock to continue to rise," said Jay Woods, chief market strategist at Freedom Capital Markets. The cautious tone reflects broader uncertainty about whether the current pace of AI investment can be sustained, especially as questions mount over the debt-financed spending spree that has fueled recent gains.
The Philadelphia SE Semiconductor Index dropped 7.9% on Tuesday, while the S&P 500 technology sector fell 3.7%. The Nasdaq Composite declined 2.21% as investors pulled back from crowded positions. "Questions about all the spending" have emerged following recent AI headlines, noted Thomas Martin, senior portfolio manager at Globalt.
Meanwhile, Cerebras Systems, an AI chip company, lowered its full-year adjusted gross margin forecast to 38%-41%, down from 47% in the first quarter. CFO Bob Komin attributed the decline to reliance on external manufacturing capacity, which "will depress core cloud and other services margin temporarily." In contrast, Nvidia (NASDAQ:NVDA) continues to report gross margins in the mid-70% range.
FedEx (NYSE:FDX) shares fell 7% premarket after its Federal Express unit posted a 7.7% operating margin, down from 8.4% a year ago. The company recently spun off its Freight business and faces pressure to improve returns in its delivery operations, with UPS (NYSE:UPS) serving as the primary benchmark for investors.
Macroeconomic data remains a key focus, with the Bureau of Economic Analysis set to release the personal consumption expenditures (PCE) price index on June 25. The Federal Reserve closely tracks the PCE, which measures consumer spending on goods and services. The April reading showed prices rising 3.8% year-over-year, and any upside surprise could reignite rate-hike fears.
The U.S. dollar held firm as investors favored safe-haven assets amid ongoing U.S.-Iran negotiations. The dollar reached a one-year high against major currencies, while oil prices declined over 1%. "A sign of instability," said Michael McCarthy of Moomoo Securities Australia, referring to recent market swings.
Barclays and Stifel both raised their S&P 500 year-end targets to 7,800 on Tuesday, citing solid earnings prospects. However, Stifel's Thomas Carroll warned that "stock concentration sits at 40-year highs," suggesting the rally needs to broaden beyond megacap technology stocks to be sustainable.
