US stock futures are signaling a muted opening for Thursday, July 2, with Dow futures trading flat at 52,670 and S&P 500 futures down 0.09% at 7,537.50 as of 2:43 PM IST. Nasdaq futures are trading 0.36% lower at 29,986 levels, reflecting continued pressure from technology sector weakness. Wall Street ended lower on Wednesday, with the Dow Jones Industrial Average slipping 13.96 points, or 0.03%, to close at 52,305.24. The S&P 500 declined 16.13 points, or 0.22%, to 7,483.23, while the Nasdaq Composite dropped 173.69 points, or 0.66%, to settle at 26,040.03. Technology shares led the decline, with the Philadelphia Semiconductor Index tumbling 6.3%, making the technology sector the worst-performing segment on the S&P 500. Investors were understandably reluctant to make big bets before fresh labour market data, with US employment report looms large as the key event for markets.
US stock futures climbed higher following reports that the US and Iran have agreed to halt attacks and will meet on Tuesday in Qatar to renegotiate terms following the dispute that escalated over the weekend. According to an Axios report, a senior US official reportedly told the publication that "We decided to stop all the kinetic activity," indicating a pause in military strikes. Another official stated that both countries will stand down "for now" and that "vessels can move freely" through the Strait as talks resume. S&P 500 futures gained 0.45%, Dow futures were up 0.22%, and the Nasdaq 100 futures climbed 0.43% at 9:08 PM EDT. As reported by Bloomberg, Shoji Hirakawa, chief global strategist at Tokai Tokyo Intelligence Lab, noted that "Investors see the exchange of attacks between the US and Iran as temporary and do not believe the situation will escalate into another war." The ceasefire has already shown tangible results, with traffic in the Strait of Hormuz increasing markedly and August WTI crude down more than 30% from its May 18 peak of over $100 per barrel, reaching around $69 compared with a little below $66 before the war began, though gasoline prices are easing slower.
Investors will closely monitor the US June nonfarm payrolls report, scheduled for release at 8:30 a.m. ET on Thursday, for fresh clues on the health of the labour market and the Federal Reserve's policy path. According to a CNBC report citing a Dow Jones survey of economists, the US economy is expected to have added 115,000 jobs in June, while the unemployment rate is projected to remain unchanged at 4.3%. Average hourly earnings are projected to have risen 3.5% year-on-year, indicating that wage growth continues to remain contained. The jobs data is being released a day earlier than usual, as US equity and bond markets will remain closed on July 3 in observance of Independence Day. Investors also remained focused on comments from Federal Reserve Chairman Kevin Warsh, who offered little fresh guidance during his appearance at the ECB Forum in Sintra yesterday, reinforcing the central bank's data-dependent approach rather than signalling where interest rates may head next. Economists expect the US economy to have created around 115,000 jobs last month, compared with 172,000 in May, though payroll data has consistently surprised to the upside this year, meaning investors remain wary of another stronger-than-expected reading. A report close to expectations would probably be the most favourable outcome for equities, while a much stronger figure could revive concerns that interest rates will stay higher for longer.
Technology stocks endured a difficult session yesterday and overnight in Asia as investors continued to take profits in semiconductor names following this year's remarkable rally. Micron Technology (NASDAQ:MU) and SanDisk (NASDAQ:SNDK) both suffered double-digit declines on Wednesday, while Nvidia (NASDAQ:NVDA) and Broadcom (NASDAQ:AVGO) also moved lower. The weakness spread into Asian trading overnight, with Samsung Electronics and SK Hynix dragging South Korea's Kospi sharply lower. Similar selling pressure was evident across several technology stocks in China and Hong Kong. The move reflects growing concerns that valuations across the AI supply chain have become increasingly demanding, with investors paying closer attention to the enormous cost of building AI infrastructure, from advanced chips and data centres to electricity consumption. Recent corporate updates have reinforced those concerns, with Apple (NASDAQ:AAPL) recently increasing prices across parts of its hardware range, citing rising component costs, highlighting the inflationary pressures facing the wider technology sector. The AI investment story remains compelling over the longer term, but markets are beginning to demand clearer evidence that heavy capital expenditure will translate into stronger earnings. With hundreds of billions of dollars still being committed to AI development, investors are becoming less willing to overlook the lack of immediate financial returns.
From a technical point of view, the chart for the Nasdaq 100 futures continues to point towards consolidation, as it hovers around the psychologically important 30,000 level. The index was clinging onto the 21-day exponential moving average, but has formed a couple of lower highs. Yet, there hasn't been any major breakdown of key support levels yet. Support comes in around the 29,850 to 30,000 area, which previously acted as support and resistance, with 29,200 as the next support level followed by 28,660. The most recent swing low from last month sits around 28,227, and that is now the line in the sand - a break below that level would be viewed as a bearish technical development. Resistance comes in at 30,500, which was tested earlier in the week before yesterday's sell-off pushed the index back down to 30,000, with 30,975 representing the all-time high. The combination of expensive valuations, rising costs and tighter monetary conditions has prompted investors to pause one of this year's strongest market themes, with much depending on whether AI investment starts delivering more tangible profits.
