US stock futures were mixed on Thursday, as a selloff in artificial intelligence (AI)-linked stocks deepened, concerns about tighter Federal Reserve monetary policy resurfaced, and investors extended losses from the previous session following a hotter-than-expected inflation report.
Nasdaq-100 futures fell around 1.1%, while S&P 500 futures slipped 0.26% in early trading. Dow Jones Industrial Average futures, however, rose around 0.37%, indicating relative resilience in blue-chip stocks.
The weakness in futures followed a sharp selloff on Wall Street on Wednesday. The tech-heavy Nasdaq Composite fell 1.9%, marking its steepest single-day decline since July 23. The S&P 500 dropped 1.1%, its biggest one-day fall since July 29, while the Dow Jones Industrial Average slipped 0.1%.
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AI Stock Selloff Deepens
AI-linked stocks remained under pressure as investors reassessed the financing requirements and potential returns of the massive investments being made in artificial intelligence infrastructure.
Concerns about corporate borrowing to fund data centres and other AI-related projects have added to investor anxiety, particularly as the prospect of higher interest rates threatens to increase financing costs.
Reuters reported that Nasdaq futures fell more than 1% as the selloff in AI-related stocks intensified, with investors worried that higher borrowing costs could make it harder for companies to sustain their AI investments.
Among individual stocks, data centre operator CoreWeave fell 4.5% in premarket trading after plunging 15% in the previous session. Oracle slipped 2%, extending its nearly 9% decline on Wednesday. Nvidia lost 1.3%, while Micron Technology and Advanced Micro Devices also traded lower.
The pressure extended to Asian markets, where technology stocks led declines. South Korea's Kospi plunged 7.84%, while Japan's Nikkei 225 fell 4.4%. Hong Kong's Hang Seng Index lost 1%, and mainland China's CSI 300 declined 1.41%.
Inflation Fuels Fed Rate Concerns
Investors were also reassessing the Federal Reserve's policy outlook after September's consumer inflation data came in hotter than expected, raising concerns that interest rates could remain elevated or rise further this year.
The inflation report has complicated expectations for monetary easing, particularly as rising energy costs continue to add to price pressures.
Jamie Cox, managing partner at Harris Financial Group, said inflation remained a significant concern and linked the price pressures to energy supply disruptions and ongoing conflicts.
The possibility of tighter monetary policy poses an additional challenge for technology companies that depend on substantial capital expenditure and external financing to expand their AI infrastructure.
Investors Await Fresh Economic Data
Market participants are now turning their attention to Thursday's economic releases for further clues on inflation and the direction of monetary policy.
September's Producer Price Index (PPI), retail sales figures and weekly initial jobless claims were scheduled for release at 8:30 a.m. Eastern Time.
Investors are also tracking the ongoing earnings season, with regional lenders US Bancorp and PNC Financial Services, along with Charles Schwab, scheduled to report results.
The combination of AI-related selling, persistent inflation concerns and uncertainty over the Federal Reserve's next move is likely to keep investors cautious as trading progresses.
Commenting on the US stock futures outlook, Vested said markets were heading into the October 15 session on a cautious note following Wednesday's inflation-led sell-off. The S&P 500 declined 1.1%, while the Nasdaq Composite fell 1.9%, marking its sharpest drop since July. The Dow was largely unchanged.
Vested said the September consumer price index (CPI), which rose 3.7% year-on-year against expectations of 3.6%, had renewed concerns over the possibility of another US Federal Reserve rate hike.
Technology stocks, particularly semiconductor and AI-linked shares, remained under pressure after the Philadelphia Semiconductor Index dropped 4.5% in the previous session. AMD and Nvidia also registered sharp declines, while weakness in Asian chip stocks pointed to continued risk aversion in the technology sector.
Vested noted that Thursday's producer price index (PPI), retail sales and initial jobless claims data would be key indicators for investors assessing the inflation outlook and the potential path of US interest rates.
For Indian investors, a stronger rupee, lower crude oil prices and softer US Treasury yields could offer some relief. However, Vested cautioned that persistent inflation and volatile interest-rate expectations could keep US markets under pressure, making earnings quality and valuations more important than broad market momentum.
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