By Tharuniyaa Lakshmi and Shashwat Chauhan
Oct 8 (Reuters) – US stock index futures fell on Thursday as oil prices soared and Treasury yields hovered near multi-year highs, fueling inflation concerns ahead of an earnings season that will test whether corporate profits can sustain the momentum.
Brent crude futures jumped 4.8% to more than $105 a barrel on persistent worries about supply from the Middle East after increasing attacks on shipping in the Gulf and the Strait of Hormuz.
The bond market selloff showed no signs of slowing as the yield on the benchmark 10-year Treasury bond stood at 5.34%, close to its highest level since 2002.
Risk assets around the world took a hit on Thursday. Megacap growth stocks were broadly lower, with Amazon.com, Tesla and Nvidia down around 1% each.
Chip-related companies also plunged, with Marvell Technology, AMD and Intel down about 2% apiece.
Forecasts of record quarterly profit by memory-chip giant Samsung Electronics failed to lift sentiment and its shares ended down 1.3%. Rival Micron Technology dropped 2.1%.
Meanwhile, the Wall Street Journal reported on Wednesday that Broadcom is lining up $50 billion of financing for OpenAI, with Oracle also seeking an unspecified sum, spurring fears that massive debt issuance by technology companies could intensify the competition for capital.
Broadcom and Oracle were trading lower amid wider weakness in tech stocks.
“Investors are balancing two competing forces: expensive money and high yields on one side, versus strong earnings and AI-related capital spending on the other,” said Naeem Aslam, CIO at Zaye Capital Markets.
A rebound in Treasury yields and oil prices knocked the S&P 500 and the Nasdaq from record highs a day earlier, while the Dow snapped a four-day winning streak.
At 07:24 a.m. ET, Dow E-minis fell 462 points, or 0.9%, S&P 500 E-minis eased 39.5 points, or 0.5%, and Nasdaq 100 E-minis lost 231.75 points, or 0.73%.
The quarterly earnings season picks up pace next week with big banks including JPMorgan Chase set to report results. Optimism around strong earnings has buoyed US stocks lately despite shaky geopolitical developments and concerns about rising interest rates.
The technology and energy sectors are expected to report the biggest quarterly earnings growth, while the broader S&P 500 is expected to post a 30.6% increase in quarterly earnings, according to data compiled by LSEG.
US Federal Reserve Governor Christopher Waller hinted at a possible pause at the central bank’s upcoming meeting. Additional rate hikes would likely be needed to lower inflation to the Fed’s 2% target, but there was “flexibility” about the pace of increases, he said earlier in the day.
Traders widely expect the Fed to hold rates steady at its October meeting, but a December hike remains on the cards, according to CME FedWatch.
In early movers, Wolfspeed soared 14.5% after the chipmaker received a $1.5 billion conditional loan commitment from the US Department of Defense.
Applied Digital rose 1.1% after the data center provider’s first-quarter revenue more than quadrupled to $341.9 million.
PepsiCo cut its annual core profit forecast and said it would pursue additional spending cuts. Its shares last rose 2.4% in volatile trading.
(Reporting by Tharuniyaa Lakshmi and Shashwat Chauhan in Bengaluru; Editing by Pooja Desai)
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