Wall Street expects losses for the fifth day as chip makers retreat

Wall Street expects losses for the fifth day as chip makers retreat

US stock futures tumbled on Thursday as concerns over technology stocks gave bears fresh incentive to extend their recent slide.

How are stock index futures traded
  • S&P 500 ES00 index futures,
    -0.81%
    It fell 30 points, or 0.8%, to 3,926 .

  • Dow Jones Industrial Average futures YM00,
    -0.62%
    It fell 187 points, or 0.6%, to 31,345 points

  • Nasdaq 100 futures NQ00,
    -1.21%
    It fell 145 points, or 1.2%, to 12140 .

On Wednesday, the Dow Jones Industrial Average DJIA,
-0.88%
The S&P 500 SPX fell 308 points, or 0.96%, to 31,791.
-0.78%
It fell 44 points, or 1.1%, to 3,986, and the Nasdaq Composite Index.
-0.56%
It fell 135 points, or 1.12%, to 11,883. The S&P 500 has fallen for seven of the past nine trading days.

What is driving the markets

Stock index futures suggest that stocks will struggle to break a four-day losing streak.

The S&P 500 lost 4.2% in August and is down 5.8% since the close of trading last Thursday, weighed down by central bankers’ hawkish talk about inflation, particularly from the US Federal Reserve.

“Markets have played out a familiar theme, with risky assets losing more ground as investors rally in more price increases over the coming months,” Henry Allen, strategist at Deutsche Bank, said in a morning note.

US non-farm payrolls data due on Friday should provide the next big driver of the Federal Reserve’s monetary policy outlook. Meanwhile, news of the COVID-19 lockdown in Chengdu, China, has highlighted concerns about slowing growth in the world’s second-largest economy.

The previous two sessions started with futures pointing up in the morning, just to dashed hopes. Thursday’s bulls appeared unwilling to be caught for the third time in a row, with their caution exacerbated by concerns over the chip sector.

Stocks in Nvidia NVDA,
-2.42%
and Advanced Micro Devices AMD,
-2.38%And the
Which together holds a 4.1% weighting in the Nasdaq 100, fell in pre-market trade, after the US government imposed restrictions on sales of some products to China.

Jim Kramer, in a distinctive early morning tweet, found solace in what he saw as the relatively modest declines of futures.

Source: Twitter

Perhaps helping to stop additional losses is the belief that the recent pullback may have already left the market technically oversold.

The 14-day RSI for S&P 500 futures was at 27.8 Thursday morning, according to data from CMC Markets. Watchers consider oversold below 30 and overbought above 70 for the closely watched RSI.

“The market went from overbought to oversold very quickly. The MarketEar.com warned in a newsletter that the problem with most “critics” talking about the oversold story is that things can stay “above” for longer than Most people believe it.

US economic data on the list for Thursday includes the weekly jobless claims report at 8:30 AM ET and the ISM manufacturing index at 10 AM ET.

How are the other assets?
  • Global growth concerns have left oil prices near seven-month lows, with US West Texas Intermediate CL.1 futures contracts,
    -1.61%
    It fell 1.8% to $87.90 a barrel.

  • 10-Year Treasury Bond Yield TMUBMUSD10Y,
    3.202%
    It rose 1.6 basis points to 3.210%.

  • ICE DXY dollar index,
    + 0.18%
    It rose 0.2% to 108.93, which is just below 20-year highs, and this helped push gold GC00,
    -0.61%
    It fell 0.8% to $1,713 an ounce.

  • Bitcoin BTCUSD,
    -1.65%
    It fell 1.6% to $19,880.

  • Asian and European bourses continued to track Wall Street’s decline. Nikkei 225 NIK Index,
    -1.53%
    In Japan lost 1.5% and Stoxx 600 SXXP,
    -1.55%
    It fell 1.6%.

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