4:12pm: Seeing red
The three major stock indexes booked losses for Thursday’s session, with the Nasdaq retreating from earlier gains to finish the day 0.7% lower at 17,871 points.
The Dow Jones shed 1.3% or 533 points at 40,665 points while the S&P 500 was 0.8% lower at 5,544 points.
After hours, investors will be looking to Netflix’s latest earnings report, with the streaming giant facing high expectations.
12:20pm: Labor market cooling fails to lift stocks
Tech stocks failed to rebound around midday following the Nasdaq's worst day since 2022, despite chip manufacturer TSMC posting better-than-expected results.
The tech-heavy Nasdaq Composite erased earlier gains and fell over 1%, while the S&P 500 also dropped 0.7%. The Dow Jones Industrial Average slipped 0.4% after reaching an all-time closing record in the previous session.
The market's recent rally has encountered increased turbulence this week due to political, geopolitical, and trade risks, unsettling investors who had been confident about potential interest rate cuts this year.
TSMC's strong quarterly earnings provided a temporary boost to market sentiment during the morning session. The Taiwanese chip giant beat profit expectations with a 36% jump and raised its 2024 sales outlook, signaling confidence in the AI boom. However, this positive news was not enough to offset the overall downward trend in tech stocks.
Elsewhere, the labor market showed signs of cooling, with the number of continuing applications for unemployment benefits reaching its highest level since November 2021. This development further bolstered expectations for potential interest rate cuts.
Investors are also closely watching the US presidential race, with Republican nominee Donald Trump's potential to move markets and President Joe Biden's recent COVID-19 diagnosis adding to the political uncertainty.
9:50am: Nasdaq opens slightly higher
Wall Street has opened Thursday's session on the front foot, helped by a rebound for big tech and a new Dow Jones high.
The Nasdaq Composite index has started 0.1% higher as have the S&P 500 and Dow Jones, with the latter hitting a new all-time high above 41,250.
Going the other way, the small-cap Russell 2000 opened down 1.4%.
Among the big risers are Nvidia up 3.4% and Meta Platforms up 2.9%.
Topping them is Warner Bros Discovery Inc (NASDAQ:WBD, ETR:J5A), up 4% on reports it is looking at spinning off its digital streaming and studio businesses from its TV networks.
The FT revealed that CEO David Zaslav is examining several options for the company, ranging from selling assets to separating its Warner Bros movie studio and Max streaming service into a new company.
8.10am: Mixed start on Wall Street expected
US stocks are predicted to have another mixed start on Thursday, following the tech-led rout the day before.
Nasdaq 100 futures were up 0.3%, while S&P 500 futures rose 0.1% but those for the Dow Jones were down 0.1% and down 0.2% for the Russell 2000 small cap index.
On Wednesday a technology sell-off left the Nasdaq down 2.8% by the closing bell, its worst day since 2022. The S&P 500 fell 1.4% and the Russell 2000 lost 1.1%, while only the Dow Jones ended in positive territory, up 0.6%.
Analyst Mohit Kumar at Jefferies said the main theme was the "sector rotation in equities", as tech stocks and chipmakers suffered.
"It started with increasing probability of a rate cut in September and gained grounds as Trump odds for the Presidency have increased," he said, while other analysts pointed to Bloomberg reports about the Biden administration's intention to bring in sanctions to prevent chip technology going to China.
"Despite the S&P down 1.1% yesterday, around half the stocks in S&P 500 ended in positive territory. Financials, consumer staples and energy were the outperformer in yesterday moves," Kumar said.
His view was the rotation theme "could continue for a little while longer" as the tech sector is "over owned and some froth needs to clear", while overall equities positioning "is not stretched".
"However, under the hood there are significant differences with Nasdaq positioning at +5.7 and broad base Russell positioning at +0.8 (on a scale of -10 to +10).
"With the market moving towards a possible September rate cut and Trump trades gaining ground, we could see some more position squaring over the coming days."
Tech bull Dan Ives at Wedbush said the "brutal" tech sell-off was on the back of Trump comments to the media about stepping up China tariffs and protecting Taiwan from China.
"This is just the appetizer comment heading into Trump's much anticipated keynote speech tonight at the RNC in which we expect to hear more details around Trump's broader strategy when dealing with China, tariffs, and Taiwan," he said.