U.S. stock futures fall as Broadcom drop weighs on chip sector

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Ciaran Ryan

5 hours ago

U.S. stock futures fall as Broadcom drop weighs on chip sector — Broadcom drags chip stocks

Wall Street's recent run to record highs is losing momentum as investors balance corporate earnings reactions with geopolitical and inflation risks. Nasdaq 100 futures lead declines on Thursday after Broadcom's revenue miss rattles semiconductor shares, while traders also await fresh U.S. labor market data before the Federal Reserve's June meeting.

Highlights

Broadcom shares fall 12.4% premarket after a quarterly revenue miss, threatening to erase over $270 billion in market value and dragging semiconductor stocks lower.
Nasdaq 100 E-minis drop 1.23% and S&P 500 E-minis lose 0.49% as renewed U.S.-Iran tensions and Fed policy uncertainty weigh on broader market sentiment.
SpaceX begins an investor roadshow Thursday targeting a $75 billion IPO at a $1.75 trillion valuation, potentially ranking among the top 10 U.S.-listed companies.

Premarket losses hit technology shares

As reported by Reuters, S&P 500 and Nasdaq 100 futures are lower on Thursday after Broadcom's quarterly revenue miss triggers a sharp premarket selloff in the chipmaker and drags on the wider semiconductor sector.

Broadcom shares slump 12.4% before the bell after the company also maintains its long-term target of $100 billion in AI chip sales. The stock, up nearly 55% this quarter, could erase more than $270 billion in market value if the losses hold through the trading session.

Among other movers, CrowdStrike drops 10% after the cybersecurity company reports a rise in first-quarter operating expenses. Dow E-minis are up 120 points, or 0.24%, at 05:16 a.m. ET, while S&P 500 E-minis are down 37 points, or 0.49%, and Nasdaq 100 E-minis are down 376 points, or 1.23%.

Fed outlook and Iran tensions shape sentiment

The broader market pause comes as investors assess a renewed flare-up in hostilities between the U.S. and Iran, which threatens to keep oil prices elevated and add to inflation pressure. Although the two sides agree to a ceasefire in early April, talks to end the war and reopen the Strait of Hormuz make little progress.

An ISM survey on Wednesday shows the U.S. services sector expands in May, and weekly jobless claims due later on Thursday are set to provide the final major reading before Friday's monthly employment report. The figures offer new Federal Reserve Chairman Kevin Warsh an updated view of labor market conditions ahead of his first policy meeting this month.

LSEG data show traders see a 75% chance of a 25 basis point rate hike before the end of the year. Richmond Fed President Thomas Barkin and San Francisco Fed President Mary Daly are also due to speak on Thursday before the central bank enters its pre-meeting blackout period.

Separately, an investor roadshow for Elon Musk-led SpaceX begins on Thursday ahead of its planned June 12 market debut. The company aims to raise $75 billion in what would be a record IPO, valuing it at $1.75 trillion and placing it among the 10 largest U.S.-listed firms.

Broadcom’s after-hours selloff following its quarterly update highlighted how sensitive the AI-chip rally has become to revenue outlooks and long-term growth targets. Our publication previously noted that, despite reaffirming its $100 billion AI chip sales goal for 2027, the market punished the stock as guidance fell short of the most optimistic expectations, wiping out more than $250 billion in value and putting the broader semiconductor surge under scrutiny.

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