Traders work on the floor of the New York Stock Exchange on June 14, 2024.
Brendan McDiarmid | Reuters
U.S. stock futures edged up overnight on Wednesday after the Nasdaq Composite Index posted its worst closing price since 2022 as investors pulled money out of big tech stocks.
Dow Jones Industrial Average futures rose 57 points, or 0.14%, while S&P 500 futures and Nasdaq 100 futures rose 0.19% and 0.31%, respectively.
In after-hours trading, Discover Financial rose 4% after it reported better-than-expected second-quarter results, while meat substitute maker Beyond Meat fell 16% after The Wall Street Journal reported, citing people familiar with the matter, that the company was meeting with bondholders to begin discussions about restructuring its balance sheet.
Rotational trading continued during regular trading hours on Wednesday.The tech-heavy Nasdaq suffered its worst day since December 2022, closing below 18,000 for the first time since July 1.The S&P 500 fell 1.4%.
But the blue-chip Dow, which has less exposure to tech stocks than the other two indexes, fared better: The 30-stock index rose 243.6 points, or 0.6%, to close above 41,000 for the first time in history.
Wall Street has been selling off shares of companies that stand to benefit from artificial intelligence this year as the likelihood of a September rate cut rises and optimism across the market has strengthened.The Russell 2000 fell 1% on Wednesday, but the small-cap index has risen more than 9% over the past five trading days.
Investors are hoping for broader gains amid concern that the tech rally is losing steam, but some predict that management changes alone may not be enough to protect shares from future challenges, including a possible economic slowdown.
“This is a market two or three months ahead of us anticipating a rate cut, a Fed pivot market, and it’s exactly what we expected. You’re going to see a big rally in small caps and other areas of the risk market where capital is really being freed up,” Lauren Goodwin, chief market strategist at New York Life Investments, said Wednesday on CNBC’s “Closing Bell.”
“But the reality for the market is we’re already in a soft landing over the next nine months. It’ll probably be a couple of months before the market starts to catch up with that reality, given why the Fed is cutting rates, but I expect the economy could still slow,” Goodwin added.
On the economic front, jobless claims numbers for the week ending July 13 are due to be released Thursday morning. According to Dow Jones, economists expect claims to reach 229,000, up from 222,000 the previous week.
On the earnings front, Domino’s Pizza and Alaska Airlines are scheduled to report results before the market opens on Thursday, while Netflix is scheduled to report after the market closes.
