Stock futures declined on Friday following a downturn for the S&P 500, as traders anticipated an inflation report due in the morning. Futures associated with the Dow Jones Industrial Average declined by 295 points, representing a decrease of 0.6%. S&P 500 futures declined by 0.4%, mirroring the movement in Nasdaq-100 futures. Prominent software companies experienced a decline. Salesforce experienced a decline of over 2%, while Microsoft saw a reduction of approximately 1%, impacting Dow futures negatively. Cybersecurity firm Zscaler experienced a decline of 9% following a shortfall in deferred revenue and billings for the fiscal second quarter, which did not meet expectations. CoreWeave experienced a decline of 10% following the release of disappointing guidance.
Negative responses to significant technology earnings weighed on the overall market on Thursday. The S&P 500 experienced a decline of 0.5%, whereas the Nasdaq Composite, which is heavily weighted towards technology, fell by 1.2%. The 30-stock Dow concluded the session with an increase of 17 points, representing a gain of less than 0.1%. Nvidia’s 5.5% loss on the day surprised many investors, who maintain a bullish outlook on the chipmaker in light of its impressive fourth-quarter results and the anticipated product cycle ahead. Market participants have linked the drop in shares to uncertainties surrounding Nvidia’s agreement with OpenAI, a lack of confidence in the artificial intelligence sector, and apprehensions regarding the substantial AI capital expenditures of hyperscalers. “A beat-and-raise earnings report from Nvidia signaled robust demand for AI capital expenditures, but stocks are tanking anyway amid a lackluster mood on Wall Street,” stated Jose Torres.
Concerns regarding the saturation of modern technology’s growth potential, which raises apprehensions about its maturity, are resulting in declines across all of the Magnificent Seven companies. During Thursday’s session, there was a notable shift as investors gravitated towards more cyclical sectors of the market, with financials and industrials emerging as the top performers of the day. Tensions surrounding President Donald Trump’s tariff policies and U.S.-Iran relations continue to linger in the minds of investors. “Investors are exercising caution in their positioning as uncertainty levels rise,” stated Sameer Samana. Samana maintains a strong belief that the expansion of the economy and the profitability of companies will enable the S&P 500 to navigate short-term challenges and ascend beyond its present levels.
In the near term, market participants are preparing for the forthcoming announcement of January’s producer price index, which serves as an indicator of wholesale inflation. Economists surveyed by Dow Jones project the headline reading to be 0.3%, with core PPI, which omits energy and food prices, also expected to arrive at 0.3%. Friday signifies the conclusion of February’s trading activities, a tumultuous month characterized by significant volatility in technology stocks, driven by apprehensions surrounding potential disruptions from artificial intelligence. In this context, the Nasdaq Composite is trending towards a 2.5% decline, marking its most significant monthly performance drop since last March. The S&P 500 is projected to experience a decline of 0.4% in February, whereas the Dow is anticipated to achieve an increase of 1.2%.