The major U.S. index futures are indicating a lower open on Thursday, suggesting that stocks may continue the pullback observed in the last two sessions. Persistent worries regarding the short-term prospects for the artificial intelligence sector could potentially exert pressure on the markets. Nvidia and Oracle are poised to drive the markets downward, as the AI companies experienced declines of 1.2 percent and 3.5 percent, respectively, in pre-market trading. The futures experienced additional declines after the publication of a series of predominantly positive U.S. economic indicators, highlighted by a Labor Department report revealing an unexpected drop in first-time claims for U.S. unemployment benefits for the week ending September 20th.
The Labor Department reported that initial jobless claims decreased to 218,000, marking a reduction of 14,000 from the revised level of 232,000 from the previous week. Economists had anticipated that jobless claims would rise slightly to 235,000, an increase from the 231,000 initially reported for the prior week. The data may raise concerns that signs of strength in the labor market will persuade the Federal Reserve that it is unnecessary to keep lowering interest rates. The Commerce Department also released a report that unexpectedly indicated a significant rebound in durable goods orders for the month of August. The report indicated that durable goods orders experienced a significant increase of 2.9 percent in August, following a downward revision of 2.7 percent in July. Economists had anticipated a decline in durable goods orders by 0.5 percent, in contrast to the 2.8 percent drop reported for the prior month. On Friday, the Commerce Department is set to unveil its report on personal income and spending for August, which encompasses the Fed’s favored metrics on consumer price inflation.
Following increased pressure throughout Tuesday’s session, stocks experienced additional declines during trading on Wednesday. The major averages exhibited uncertainty at the outset of the session but gradually descended into negative territory as the day unfolded. The major averages concluded the day below their worst levels, yet remained moderately lower. The Dow decreased by 171.50 points, or 0.4 percent, closing at 46,121.28. The Nasdaq dropped 75.62 points, or 0.3 percent, to finish at 22,497.86, while the S&P 500 fell by 18.95 points, or 0.3 percent, ending at 6,637.97. The prolonged decline on Wall Street may have been influenced by uncertainty regarding the short-term prospects for the artificial intelligence sector after Tuesday’s downturn. Nvidia, the AI darling and market leader, experienced a decline of 0.9 percent following a drop of 2.8 percent on Tuesday, while fellow AI player Oracle faced a slump of 1.7 percent. Concerns regarding valuations may have persisted in influencing the markets following remarks from Federal Reserve Chair Jerome Powell, who indicated his belief that stocks could be overvalued.
At an event in Rhode Island on Tuesday, Powell remarked that equity prices are “fairly highly valued” in light of the recent surge to record highs. Traders continue to convey uncertainty regarding the outlook for interest rates. Powell noted that near-term risks to inflation are skewed to the upside, while risks to employment are tilted to the downside, describing this as a “challenging situation.” Powell cautioned that there is “no risk-free path” for rates, emphasizing that cutting rates too aggressively could “leave the inflation job unfinished,” while maintaining rates too high for an extended period could unnecessarily result in labor market weakness. Computer hardware stocks experienced a significant decline throughout the session, as the NYSE Arca Computer Hardware Index fell by 2.3 percent following Tuesday’s trading, which concluded at a record closing high.
Notable weakness was observed among gold stocks as the price of the precious metal experienced a pullback, leading to a 2.2 percent decline in the NYSE Arca Gold Bugs Index. As the day unfolded, airline stocks faced increasing pressure, resulting in a 1.6 percent decline in the NYSE Arca Airline Index. Networking, brokerage, and telecom stocks experienced significant weakness, whereas energy stocks defied the downward trend due to a sustained increase in crude oil prices.