Dow futures rise 139 points while Nasdaq futures drop 1.1% on AI funding fears

Nasdaq 100 E-minis tumbled 1.1% on Thursday as concerns about AI funding dipped due to rising interest rates, exacerbating a recent downturn in AI-linked stocks. The Nasdaq and S&P 500 experienced their largest one-day decline since July after unexpectedly high inflation figures raised expectations of more Federal Reserve rate hikes, causing tech stocks to tumble.

TSMC, the world's biggest manufacturer of advanced chips, expressed cautious outlook for 2027 due to economic uncertainties after reporting its sixth consecutive record quarterly profit. AI lab Anthropic's third-quarter revenue surged 45% compared to the previous quarter, yet this positive news failed to boost investor confidence.

CoreWeave, a data-center operator grappling with debt, dropped another 6.3% in premarket trading after falling 15% on Wednesday. Oracle, a cloud computing giant, slipped 2.1% following a 9% decline the previous day. Bonds of these companies and chipmakers, hyperscalers, and cloud businesses were pressured, leading to record-high yields.

CoreWeave, Oracle, and other affected firms appeared set for a second day of significant declines. Experts predict a slowdown in AI infrastructure development would likely result in a substantial slowdown in US growth expectations. Mohit Kumar, an economist at Jefferies, anticipates earnings and investor demand to remain robust, but the company may take some chips off the table ahead of the midterm elections.

At 5:50 am, Dow E-minis increased by 165 points (0.32%), S&P 500 E-minis declined by 21 points (0.27%), and Nasdaq 100 E-minis dropped 331.5 points (1.1%). Investors will closely monitor producer price data at 8:30 am for insights into factory inflation, and later releases of September retail sales, initial jobless claims, and various business surveys are expected.

Traders are pricing a 27% chance of a central bank rate hike later in the month, up from 20% a week ago, with a 67% probability of a 25-basis-point increase in December. The Nasdaq has fallen over 3% from its record highs last week, with worries about higher interest rates and AI spending overshadowing what is expected to be a solid earnings season.

Analysts forecast S&P 500 profits to grow 30.6% in the third quarter, with technology and energy sectors driving the performance. Shares of Rocket Lab fell 9.7% after delaying the inaugural launch of its larger Neutron rocket until the following year.