By Joel Jose and Twesha Dikshit
June 10 (Reuters) – U.S. stock index futures fell on Wednesday as technology stocks extended losses, while renewed tensions between the U.S. and Iran weighed on sentiment ahead of a key inflation report that could alter the interest rate path.
Volatility has picked up across stock markets in recent days, as investors contend with a widening array of risks, including high valuations in the tech sector, escalating tensions in the Middle East and expectations that the Federal Reserve may need to hike interest rates to curb inflation.
Nvidia, Broadcom and Micron Technology fell between 2.1% and 4% in premarket trading, with losses rising again after a brief rebound on Monday.
Technology and AI stocks retreated sharply on Friday as Broadcom’s disappointing outlook fueled concerns about stretched valuations in chipmakers.
“The tech sector is coming under pressure from a combination of higher rate expectations, which lowers the current value of more distant profits, and anxiety over elevated valuations and uncertainties over the monetization of AI,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
“Investors’ positioning in parts of the sector may have also become extended after a strong rally.”
The rotation out of highly subscribed technology shares has aided other areas of the markets that have lagged this year, including healthcare, real estate and consumer staples.
At 06:26 a.m. ET, Dow E-minis were down 379 points, or 0.74%, S&P 500 E-minis were down 60.25 points, or 0.81%, and Nasdaq 100 E-minis were down 371.5 points, or 1.28%.
The U.S. military carried out strikes on Iranian targets after President Donald Trump vowed to retaliate against the downing of a U.S. Apache attack helicopter – marking a fresh escalation that risks unraveling the fragile ceasefire between Washington and Tehran.
Oil prices were largely unchanged, with Brent crude trading above $91 a barrel. [O/R]
Attention now turns to May consumer price data, due at 8:30 a.m. ET. The report will be closely watched for clues on how rising energy costs, due to the Iran conflict, are feeding into inflation, especially after last week’s hotter-than-expected jobs report fueled concerns about potential Fed rate hikes.
“A hotter-than-expected reading would reinforce the narrative that inflation pressures remain embedded in the economy, particularly at a time when higher energy prices are adding to broader cost pressures,” said Daniela Hathorn, senior market analyst at Capital.com.