U.S. equity futures are indicating a largely flat start to Wednesday’s session, suggesting that markets may struggle to find clear direction following the previous day’s technology-led selloff.
Futures held steady even after fresh data from payroll processor ADP showed that private-sector job growth in January came in well below expectations. ADP reported that private employment increased by just 22,000 jobs last month, following a downwardly revised gain of 37,000 in December. Economists had been forecasting an increase of around 45,000 jobs, compared with the 41,000 initially reported for the prior month.
Despite the muted reaction to the data, technology stocks could remain under pressure after a sector rotation weighed heavily on markets on Tuesday. Shares of Advanced Micro Devices (NASDAQ:AMD) are likely to be a drag, with the chipmaker tumbling 10.1% in premarket trading.
The sharp move in AMD follows the release of better-than-expected fourth-quarter results, offset by first-quarter guidance that fell short of some analysts’ expectations.
By contrast, Super Micro Computer (NASDAQ:SMCI) is providing a lift to sentiment within the sector. The stock is surging 9.5% ahead of the open after the company reported fiscal second-quarter results that beat estimates and raised its full-year revenue forecast.
Wall Street closed sharply lower on Tuesday, reversing much of the prior session’s gains. All three major indexes finished in the red, led by pronounced losses in technology shares. The Nasdaq dropped 336.92 points, or 1.4%, to 23,255.19. The S&P 500 declined 58.63 points, or 0.8%, to 6,917.81, while the Dow Jones Industrial Average fell 166.67 points, or 0.3%, to 49,240.99.
The pullback was driven largely by investors rotating out of technology, a trend underscored by the Nasdaq’s underperformance. Software stocks were among the hardest hit, dragging the Dow Jones U.S. Software Index down 3.5% to its lowest close in more than nine months.
This weakness came despite a notable rally in Palantir Technologies (PLTR), which jumped 6.9% after the AI-focused software company delivered stronger-than-expected fourth-quarter results and issued an upbeat outlook.
Semiconductor shares also faced broad selling pressure, with the Philadelphia Semiconductor Index sliding 2.1%. NXP Semiconductors (NASDAQ:NXPI) fell 4.5% even though the Dutch chipmaker topped expectations on both earnings and revenue.
Outside the technology space, several sectors benefited from the rotation. Retail giant Walmart (NYSE:WMT) climbed 2.9%, pushing its market capitalization above $1 trillion for the first time.
“It would be hard to find a better illustration of the market’s recent rotation away from tech than Walmart achieving a $1 trillion valuation for the first time,” said AJ Bell head of markets Dan Coatsworth. He added, “This bastion of Main Street joins a club which has previously only been populated by technology businesses and Warren Buffett’s Berkshire Hathaway vehicle.”
Gold-related stocks also advanced sharply, supported by a strong rebound in bullion prices. The NYSE Arca Gold Bugs Index jumped 4.4%.
Strength in steel, energy, and housing stocks also helped cushion broader market losses, preventing a deeper decline across U.S. equities.
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