US stock index futures were mostly weaker this morning, with most of the pain felt across the technology sector. NASDAQ futures were around 1% lower in early trade, with semiconductor stocks taking on most of the damage. Thursday’s trade began in a similar fashion, with tech-led losses affecting the NASDAQ and S&P 500.
All the majors came under early selling pressure but then rallied throughout the afternoon and evening. By the close of play, the NASDAQ ended just 0.1% lower while the S&P gained 0.4%. The Dow closed up 1.7% and at a fresh all-time high, while the small cap Russell 2000 added 1.5%.
Source: TN Trader
The selloff in Broadcom, which followed disappointing forward guidance in its results released after Wednesday’s close, was responsible for some negative sentiment towards semiconductors. Cybersecurity firm CrowdStrike’s 13% drop on disappointing second-quarter revenue guidance didn’t help either. After last night’s close, gym kit outfitter Lululemon dropped 11% as it too released disappointing forward guidance for the rest of the year.
Investors will keep a close eye on today’s Non-Farm Payroll release. While it’s quite clear that the Federal Reserve is focusing on the inflation side of its dual mandate, rather than the unemployment side, the labour market requires some basic scrutiny at least.
The consensus expectation is for a gain of 85,000 jobs in April, below the prior reading of 115,000. But this data set is volatile and prone to significant revisions. It’s also far from clear that the payroll release carries the weight it used to. Despite this, traders are primed for a jump in volatility should there be a significant miss.
It’s fair to say that all the major US stock indices are looking very overbought currently, particularly tech. Investors have gone ‘all-in’ on the AI trade, and SpaceX’s IPO next week is starting to suck some oxygen out of the market, contributing to an already thin atmosphere. That’s not to say equities can’t rally further, just that it should pay to be cautious up here.
* The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance.
