U.S. stock futures showed mixed signals early Thursday, with technology shares under pressure following a disappointing earnings report from chipmaker Broadcom. Nasdaq 100 futures fell 1.23% as of 5:16 a.m. ET, while S&P 500 futures slipped 0.49% and Dow futures edged up 0.24%, according to Reuters data.
Broadcom's premarket slide of roughly 12% threatened to erase more than $285 billion in market value after the company missed quarterly revenue expectations and failed to impress investors with its artificial intelligence growth outlook. The sharp decline weighed heavily on the tech-heavy Nasdaq, underscoring the heightened sensitivity of high-growth stocks to any signs of slowing momentum.
“This is a classic case of very high expectations meeting a market that wanted perfection,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown. TD Cowen analysts noted that Broadcom’s quarter left “lingering questions” about execution and ramp timelines. Despite beating some metrics, the company’s performance was not enough to satisfy investors who have grown accustomed to explosive AI-driven growth from chipmakers.
The broader market had already taken a step back on Wednesday, with the Dow Jones Industrial Average falling 1.21%, the S&P 500 declining 0.74%, and the Nasdaq Composite losing 0.89%. Analysts pointed to Middle East tensions, rising oil prices, and profit-taking as contributing factors. However, AI-related stocks had bucked the trend, rising even as other sectors cooled. “AI stocks are trading on their own completely separate world,” said Ross Mayfield, investment strategy analyst at Baird, noting that buyers remained active in the space.
Oil prices eased slightly on Thursday, providing some relief to equity markets. Brent crude fell 0.8% to $97.03 a barrel, while U.S. West Texas Intermediate dropped 0.7% to $95.32. The decline followed a ceasefire agreement between Israel and Lebanon, which sparked hopes for a broader regional deal and potential reopening of the Strait of Hormuz, a critical oil shipping lane. However, analysts remained cautious. “The path of least resistance for prices remains to the upside as long as flows remain restricted,” said UBS analyst Giovanni Staunovo. PVM Oil’s John Evans noted that while there appeared to be a breakthrough, a settled outcome was not yet clear.
Adding to the macroeconomic complexity, the Institute for Supply Management’s services index came in at 54.5 for May, indicating expansion in the U.S. services sector. However, input prices remained elevated as firms braced for potential shortages linked to the Iran conflict. Traders are now looking ahead to weekly jobless claims due later Thursday and the critical U.S. payrolls report on Friday. According to LSEG data, investors see a 75% probability of a 25-basis-point rate hike before year-end, a scenario that puts additional pressure on long-duration growth names, particularly technology stocks.
Market setups could shift quickly. A lasting regional ceasefire, lower oil prices, or stabilization in Broadcom and other AI-related names might help steady the Nasdaq. Conversely, renewed tensions around the Strait of Hormuz or a stronger-than-expected labor report could reignite inflation fears and complicate the Federal Reserve’s policy path. Bill Northey, senior investment director at U.S. Bank Wealth Management, described the market as a “tug of war” between solid U.S. fundamentals and Middle East risks, with the duration of any Hormuz shutdown central to inflation expectations.
Beyond Broadcom, other high-growth tech names also faced headwinds. CrowdStrike dropped in premarket trading after its revenue growth disappointed investors, adding to the weakness in the sector. As Friday’s jobs report approaches, market participants are adopting a cautious stance, particularly toward richly valued AI and tech stocks.
