U.S. stock futures were mixed on Thursday, as the Dow Jones index rose, while the S&P 500 and Nasdaq 100 indices fell, following Wednesday's lower close.
Global financial markets faced mounting pressure on Thursday as escalating Middle East conflict, highlighted by a cargo ship sinking after striking a mine in the Strait of Hormuz, coincided with a sharp selloff in Asian chip stocks like SK Hynix (NASDAQ: SKHY). This risk-off sentiment stems from hotter-than-expected U.S. inflation data that has stoked aggressive Federal Reserve rate-hike fears and raised doubts over funding the artificial intelligence buildout.
Meanwhile, the 10-year Treasury bond yielded 5.09%, and the 2-year Treasury bond yielded 4.72% at the last check. The CME Group's FedWatch tool projections show markets pricing in a 29.3% likelihood of the Federal Reserve hiking interest rates after its October meeting.
The SPDR S&P 500 ETF Trust (NYSE: SPY) and Invesco QQQ Trust ETF (NASDAQ: QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, were lower in premarket trading on Thursday. The SPY was down 0.23% at $767.83, while the QQQ declined 1.04% to $721.40.
Taiwan Semiconductor
- Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) slipped 2.10% despite delivering a strong third-quarter profit on Thursday, beating estimates as surging demand for AI chips pushed revenue sharply higher.
- MarketDash's Edge Stock Rankings indicate that TSM maintains a strong price trend in the short, long, and medium terms, with a strong growth score.
Telefonaktiebolaget LM Ericsson
- Telefonaktiebolaget LM Ericsson ADR (NASDAQ: ERIC) surged 9.92% in Thursday premarket after it announced simplification of Group structure and changes to the Executive Team.
- MarketDash's Edge Stock Rankings indicate that ERIC maintains a weak price trend in the short, medium, and long terms, with a good value score.
Rocket Lab
- Rocket Lab Corp. (NASDAQ: RKLB) slumped 9.77% after its Neutron launch was officially pushed to 2027.
- MarketDash's Edge Stock Rankings indicate that RKLB maintains a weak price trend in the short, long, and medium terms.
SK Hynix
- SK Hynix Inc. ADR (NASDAQ: SKHY) sank 6.47%, following the Asian sell-off despite a Reuters report that it is making its plans to build a new NAND flash memory factory in the United States conditional on Washington approving export licenses for U.S. chipmaking equipment to expand capacity at its Dalian, China, facility.
- MarketDash's Edge Stock Rankings indicate that SKHY maintains a weak price trend in the short, long, and medium terms, with a moderate value score.
Cues From Last Session
Information technology, consumer discretionary, and communication services led S&P 500 sectors lower on Wednesday, while health care and consumer staples bucked the overall trend to finish higher.
Insights From Analysts
According to the BlackRock Investment Institute's weekly commentary, the firm upgraded its outlook on short-term U.S. Treasuries to overweight while taking a more cautious, neutral stance on broader U.S. equities.
The investment firm downgraded U.S. stocks from 'Overweight' to 'Neutral', describing this shift as a "short-term risk-management move, reflecting our belief that investors must be more dynamic in today's volatile macro and market regime."
BlackRock pointed to potential near-term market volatility surrounding the artificial intelligence buildout and policy uncertainty. Despite the tactical downgrade, they maintain strong conviction in long-term AI fundamentals, noting that "existing infrastructure could grow even more valuable amid this scarcity."
Regarding the economy and interest rates, BlackRock views current market expectations for Federal Reserve rate hikes as aggressive. Upgrading short-term Treasuries, BlackRock highlighted that "higher yields offer an opportunity to add Treasuries" to lock in income and capture upside as "expectations for further Fed hikes look excessive."
Upcoming Economic Data
Here's what investors will be keeping an eye on Thursday.
- October's Empire State manufacturing survey, September's retail sales, October's Philadelphia Fed business outlook survey, initial jobless claims for the week ending Oct. 10, September's PPI, core PPI, and annual PPI data will all be released by 8:30 a.m. ET.
- August's manufacturing and trade inventories data will be out by 10:00 a.m. ET.
- Federal Reserve Bank of Cleveland President Beth Hammack will speak at 4:30 p.m., and Fed Chairman Kevin Warsh will speak at 11:30 p.m. ET.
Commodities, Crypto, And Global Equity Markets
Crude Oil WTI futures were trading lower in the early New York session by 0.34% to hover around $94.77 per barrel.
Gold Spot US Dollar rose 1.08% to hover around $4,149.71 per ounce. The U.S. Dollar Index spot was 0.53% lower at the 102.0070 level.
Meanwhile, Bitcoin (CRYPTO: BTC) was trading 2.60% lower at $81,151 per coin.
Asian markets were lower on Thursday except India's Nifty 50 index. Australia's ASX 200, South Korea's Kospi, China's CSI 300, Hong Kong's Hang Seng, and Japan's Nikkei 225 indices fell. European markets were mixed in early trading.
