U.S. equity futures fell on Thursday night as investors reassessed positions in technology and chipmaking stocks following a heavy aftershock from Broadcom's post-earnings move. Market participants were focused on the imminent release of May nonfarm payrolls for additional signals on the economy and the outlook for interest rates amid still-elevated inflation and slowing growth.
By 19:56 ET (23:56 GMT), S&P 500 futures had retreated 0.3% to 7,574.75 points. Nasdaq 100 futures slipped 0.7% to 30,266.25 points, and Dow Jones futures dipped slightly to 51,642.0 points.
The pullback in futures followed a mixed cash-market session on Wall Street in which investors broadly rotated out of technology and semiconductor names and redeployed capital into sectors more sensitive to economic activity. Early hopes that the conflict in the Middle East might de-escalate had provided some lift, but those gains were muted later in the day after Lebanese group Hezbollah rejected a ceasefire proposal from Israel. That rejection raised the prospect of increased U.S.-Iran friction, given that Tehran has made a ceasefire in Lebanon a key condition for any U.S.-brokered deal.
Chip sector leads losses after Broadcom outlook disappoints
Semiconductor stocks bore the brunt of Thursday's weakness. Broadcom Inc recorded a sizeable post-earnings reversal, with the chip designer plunging 12.6% on the day after its guidance failed to meet high market expectations. In after-hours trading, Broadcom was down 1.4% as its earnings and forward commentary prompted a wave of profit-taking across chipmakers that had run up in recent weeks.
Although Broadcom reported year-over-year earnings growth, it left its 2027 projection for artificial-intelligence chip sales unchanged at $100 billion, a detail that disappointed investors anticipating a continued pattern of a beat-and-raise. The Philadelphia Semiconductor Index declined 2.2% on Thursday, with major names including AMD, Intel, and Micron trading lower. NVIDIA bucked the broader chip pullback, advancing 2%.
The sector's vulnerability reflected a recent surge to record levels, making chipmakers particularly exposed to corrective flows as investors took profits on AI-related enthusiasm.
Rotation out of tech into economically sensitive sectors
On the main exchanges, the NASDAQ Composite finished modestly lower while the Dow Jones Industrial Average climbed to a record high as money rotated away from technology and into sectors perceived as more cyclically linked to the broader economy. The S&P 500 gained 0.4% on the session. Market participants noted that Broadcom's guidance and signs of overheating within the chipmaking complex were primary drivers of the shift.
Attention now turns to Friday's May nonfarm payrolls report. The print is expected to show a slowdown in job growth from the prior month, a development market participants will weigh alongside global geopolitical headwinds stemming from the Iran-related conflict. The strength of the labor market remains central to Federal Reserve policy decisions: a resilient jobs reading, combined with recent upticks in inflation, would give the Fed more latitude to keep rates steady or even consider further tightening later in the year.
Market positioning heading into the jobs data
With labor-market data due, traders were retrenching from some of the recent speculative positioning in technology and semiconductors. The combination of a disappointing outlook from a major chip designer and renewed geopolitical uncertainty contributed to the cautious tone in futures markets. How the May payrolls print reads will likely influence near-term risk appetite and expectations for monetary policy.