Stock futures took a downturn on Thursday evening, following the S&P 500's decline, with Nvidia's losses leading the charge. This comes as traders await the wholesale inflation data, scheduled for Friday morning. The Dow Jones Industrial Average futures dropped 268 points, or 0.5%, while S&P 500 and Nasdaq 100 futures each fell by 0.4%.
In extended trading, software giants like Salesforce and Microsoft saw their shares drop, with Salesforce tumbling over 2% and Microsoft shedding about 1%. Cybersecurity firm Zscaler's shares plummeted nearly 10% due to deferred revenue and billings falling short of expectations. CoreWeave's shares also took a hit, falling 8% after disappointing guidance.
The tech sector bore the brunt of the market's downturn, with the S&P 500 losing 0.5% and the tech-heavy Nasdaq Composite declining 1.2%. The Dow, however, managed to close the session higher by 17 points, or less than 0.1%.
Nvidia's shares took a 5.5% hit, surprising investors who remain bullish on the chipmaker despite its strong Q4 results and upcoming product cycle. Market analysts attributed the decline to doubts surrounding Nvidia's deal with OpenAI, weak sentiment in the AI trade, and concerns about hyperscalers' AI capital expenditures.
Economist Jose Torres noted, 'Nvidia's beat-and-raise earnings report indicated strong demand for AI capital expenditures, yet stocks are tanking due to a subdued Wall Street mood. Concerns about the maturity of modern technology are causing losses across the Magnificent Seven.'
Thursday's session saw investors shifting their focus to cyclical sectors like financials and industrials, with President Trump's tariff policies and U.S.-Iran tensions lingering in the background. Wells Fargo Investment Institute's Sameer Samana warned, 'Investors are adjusting their positions as uncertainty mounts.'
Looking ahead, investors are eagerly awaiting the January producer price index, a key indicator of wholesale inflation. Economists predict the headline reading to be 0.3%, while the core PPI, excluding energy and food prices, is also expected to land at 0.3%.
February has been a turbulent month for tech stocks, with the Nasdaq Composite on track for a 2.5% slide, its worst monthly performance since March 2022. The S&P 500 is set to lose 0.4%, while the Dow is poised for a 1.2% gain.
Additionally, individual investor bullishness has dropped for the fourth consecutive week, according to the AAII survey, with optimism about the six-month stock outlook falling. Contrarians are keeping a close eye on sentiment readings, as excessive bullishness can signal an impending market decline.
In other news, Netflix has backed out of a deal with Warner Bros. Discovery, causing the streamer's shares to surge nearly 10%. Meanwhile, U.S. stock futures opened lower on Thursday night, indicating a potential continuation of the market's downward trend.
