Key facts
- US stock index futures slid Thursday amid inflation worries.
- Oil prices surged nearly 4% and Treasury yields rose.
- The benchmark 10-year Treasury yield reached 5.34%.
- Samsung Electronics forecast a record quarterly profit of $80.2 billion.
- Broadcom is reportedly arranging $50 billion in financing for OpenAI.
- Wolfspeed surged 16.6% after securing a $1.5 billion loan commitment.
US stock index futures slid on Thursday, as rising oil prices and Treasury yields fueled inflation concerns and dampened investor sentiment. Chipmakers faced renewed scrutiny despite a strong quarterly profit forecast from Samsung Electronics.
Samsung Electronics projected a record quarterly profit of $80.2 billion, surpassing analyst expectations. However, this did not translate into a rally for global chip stocks, signaling lingering doubts about the sustainability of the AI boom. Nvidia eased 0.6%, Broadcom fell 1.4%, and Micron Technology dropped 1.2% in premarket trading.
The Wall Street Journal reported on Wednesday that Broadcom is arranging $50 billion in financing for OpenAI, with Oracle also seeking funds. This has raised concerns that significant debt issuance by technology companies could intensify competition for capital.
A rebound in Treasury yields and oil prices had previously caused the S&P 500 and Nasdaq to fall from their record highs a day earlier, while the Dow ended a four-day winning streak. The weak sentiment persisted on Thursday, with Brent crude jumping over 4% due to attacks on shipping in the Gulf and the Strait of Hormuz, compounded by US output cuts as a hurricane threatened offshore production.
Renewed inflation worries pushed Treasury yields higher, with the benchmark 10-year yield climbing to 5.34%, although it remained below earlier session highs. At 06:14 a.m. ET, Dow E-minis were down 0.78%, S&P 500 E-minis lost 0.4%, and Nasdaq 100 E-minis shed 0.57%.
Federal Reserve Governor Christopher Waller indicated a potential pause in the central bank's upcoming meeting, suggesting flexibility in the pace of rate hikes needed to reach the Fed's 2% inflation target. Traders widely anticipate the Fed will hold rates steady in October, but a December hike is still considered possible, according to CME FedWatch.
Wolfspeed stood out among chipmakers, surging 16.6% after securing a $1.5 billion conditional loan commitment from the US Department of Defense to expand domestic production of silicon carbide materials and power devices. Data center provider Applied Digital also saw its shares rise 3.5% after reporting its first-quarter revenue more than quadrupled to $341.9 million.