S&P 500 futures fell on Tuesday after another chipmaker warned about tough times ahead following Nvidia’s poor forecast in the prior session.
S&P 500 futures lost 0.2% as chip shares declined in the premarket. Nasdaq 100 futures fell 0.6%. Dow Jones Industrial Average futures were little changed.
Memory chipmaker Micronwarned that revenue may fall short of its prior guidance because of ’macroeconomic factors and supply chain constraints.” The stock fell nearly 4% in early trading.
It’s been a rough week for chipmakers. On Monday, weaker-than-expected revenue guidance from Nvidia weighed on the group. Nvidia was lower again in premarket trading Tuesday, shedding another 3% after a 6% decline on Monday. The iShares Semiconductor ETF lost 1.5% in premarket trading Tuesday after falling 1.5% on Monday.
The S&P 500 has climbed for three straight weeks, but earnings season has featured demand warnings from executives of major companies. Investors are watching closely to determine how the Federal Reserve’s fight against inflation is rippling through the economy.
“In our view, Fed rate hikes are impacting the economy on cue. We believe that tightening has just started to broadly hit the economy, and that our intermediate-term bearish base case remains intact,” Chris Senyek of Wolfe Research said in a note to clients on Tuesday.
Outside of chips, a pair of Nasdaq-listed stocks were also taking early hits. Novavax slumped 32%in premarket trading after slashing full-year revenue guidance because of poor demand for its Covid vaccines. Upstart declined 13% in premarket trading after the consumer lending company reported second quarter results that missed both profit and revenue expectations.
On the economic front, investors are awaiting the latest reading of the July consumer price index, due Wednesday, to find some clarity on the path of interest rate hikes from the Fed as it works to stamp out inflation, or at least slow it.
Investors looking ahead to CPI report
Many investors are watching Wednesday’s inflation report as a potential pivot point for the market. Economists surveyed by Dow Jones are expecting the July consumer price index report to show a moderation in inflation.
Expectations are for CPI to rise 0.2% month over month, and for core CPI to rise 0.5%. That would be a slowdown from the increases 1.3% and 0.7%, respectively, in June.
“If you get good abatement of inflation, in combination with this historically strong labor market, you can make a case that the June 16 low was a bottom for the market,” Kevin Simpson of Capital Wealth Planning said on “Squawk Box.” “And I know it sounds crazy, but there’s even a possibility that the Fed could thread this needle.”
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