U.S. stock futures extend losses as investors reassess AI growth prospects

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U.S. stock futures extend losses

Highlights

U.S. stock futures fall after a sharp tech selloff.
AI funding concerns weigh on major technology stocks.
Rising oil prices and Iran tensions add pressure.

December Dow Jones futures dropped 0.75%, to 52,670, while S&P 500 futures declined 0.33%, to 7,678.75. Nasdaq-100 futures fell 0.20%, to 29,084.75, extending market weakness driven by AI spending concerns and geopolitical uncertainty, according to CNBC.

AI investment concerns deepen technology selloff

Thursday's session exposed growing investor anxiety about the enormous capital required to expand AI infrastructure. The Nasdaq Composite lost 2.6%, its steepest decline since June, while the S&P 500 dropped 1.2%, its worst session since July. The technology sector fell approximately 3%, although the Dow Jones finished slightly higher.

Selling spread across major semiconductor and technology companies. Nvidia declined 4.1%, Alphabet lost 3.2%, and Advanced Micro Devices plunged 7.7%. Nvidia CEO Jensen Huang acknowledged tightening capital availability for AI infrastructure development, reinforcing concerns that financing constraints could slow expansion and challenge expectations for future earnings.

Oil prices and Treasury yields add pressure

Geopolitical developments created another source of uncertainty as reports suggested the U.S. and Israel were considering renewed strikes against Iran. West Texas Intermediate crude rose 1.4% to approximately $100.90 a barrel, while Brent climbed 0.75% to $114, raising concerns about energy costs and persistent inflation.

Higher oil prices could complicate the Federal Reserve's policy outlook by increasing transportation and production expenses. The benchmark 10-year Treasury yield rose to 4.992% after falling sharply Thursday as investors sought government bonds. Elevated borrowing costs also make expensive technology stocks more vulnerable when expectations for future growth weaken.

Market outlook depends on inflation and investor confidence

Friday's futures losses followed a volatile week in which the Nasdaq was heading for a 0.5% decline, while the Dow remained on track for a 1.7% gain. European markets also weakened, with the Stoxx 600 falling 0.8%, reflecting broader caution. Investors were awaiting the University of Michigan's final consumer sentiment reading for additional evidence about household expectations.

The combination of expensive AI investment programs, higher energy costs, and geopolitical uncertainty presents a difficult environment for equity markets. Investors will be watching whether technology companies can justify their spending plans while inflation risks constrain monetary policy. Sustained market stability may depend on stronger earnings visibility and a reduction in the pressures currently weighing on risk appetite.

As we previously reported, gold drops below $4,000 as Wall Street selloff sparks liquidity crunch.

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