Key Highlights

  • S&P 500 futures fell 0.9%, Nasdaq 100 futures lost 1.6% and Dow futures slid nearly 110 points.
  • Tesla fell 3.2% after trimming spending plans; Lam Research tumbled more than 7% on its outlook; IBM lost 4.2%.
  • Nvidia dropped 2% and Meta slipped 0.6% despite higher earnings and revenue.
  • Lockheed Martin gained 2.6% after beating on earnings and revenue; Honeywell fell 2.1% despite raising guidance.

U.S. stock futures fell on Thursday as technology shares stayed under pressure after earnings failed to impress investors, a rotation away from semiconductors looked set to continue, and oil prices climbed on renewed supply risks.

Contracts on the S&P 500 were down 0.9%, Nasdaq 100 futures lost 1.6% and Dow Jones futures declined nearly 110 points.

Tech Earnings Fail to Calm Nerves

Meta Platforms Inc. (NASDAQ: META) slipped 0.6% in premarket trading despite reporting higher earnings and revenue. Revenue grew 26% to $64.6 billion, and the company said it will split its stock 2-for-1 and create a new class of non-voting shares. Tesla Inc. (NASDAQ: TSLA) fell 3.2% after scaling back its spending plans; capital investment in the previous quarter came in below expectations, and the company cut its full-year capex guidance to about $20 billion.

The sharpest drop came from chip-equipment maker Lam Research Corp. (NASDAQ: LRCX), which tumbled more than 7% after issuing a disappointing outlook despite record quarterly revenue. Nvidia Corp. (NASDAQ: NVDA) dropped 2%, and International Business Machines Corp. (NYSE: IBM) lost 4.2% after reporting a profit beat.

Micron Technology Inc. (NASDAQ: MU) also faces a one-day strike at its Taoyuan site in Taiwan on Thursday over profit-sharing, according to TipRanks, which added to pressure on memory stocks. The slide followed a selloff in Asian markets, Benzinga reported.

The selling comes after a bruising stretch for semiconductors. Chip stocks had their longest losing streak since 2008 earlier this month, according to Benzinga, and the VanEck Semiconductor ETF has been weak.

Industrials Split

Defense and industrial names diverged. Lockheed Martin Corp. (NYSE: LMT) gained 2.6% after beating on earnings and revenue, with third-quarter sales up 11% to $20.7 billion and a record backlog of $292 billion, TradingKey reported. Honeywell Technologies (NASDAQ: HON) fell 2.1% even though it raised its full-year outlook, a reminder that investors are focused on how results compare with expectations.

Oil and Rates

Brent crude rose toward $112 a barrel, near its four-year high of $114.44, after a drone attack near Saudi Aramco’s Shaybah oilfield killed two people and the U.S. ordered non-essential staff and families out of Saudi Arabia. Reports said U.S. and Israeli planners have drawn up plans for strikes on Iran after the Nov. 3 midterms.

Higher oil is feeding rate fears. The Federal Reserve is expected to hold at its Oct. 27-28 meeting, but markets price roughly a 90% chance of an increase in December. The 10-year Treasury yield eased to about 5.08% as investors sought safe havens, after touching multi-decade highs earlier this month.

Cracks in the Economy

September data showed the housing market in a deep freeze. Pending home sales fell 7.3% to a record low and housing starts fell 5.2%, with the 30-year mortgage rate averaging 7.40%, the highest in nearly three years.

What to Watch

Investors will watch whether the rotation out of semiconductors extends, how oil trades after the Saudi attacks, and how Treasury yields behave. Western Digital reports after the close. The Fed meets next week, and the Nov. 3 midterms and the Oct. 28 UK Budget add to the event risk.

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