U.S. stock index futures were modestly higher late Tuesday after a widespread retreat in technology and semiconductor stocks erased gains from earlier in the year. Traders cited a mix of geopolitical developments and fresh economic data as drivers of market sentiment as they prepared for a slate of earnings and macro releases.
Futures snapshot - By 20:02 ET (00:02 GMT), S&P 500 Futures rose 0.2% to 7,453.25 points. The NQU26 contract was up 0.4% to 29,779.50 points, while YMU26 futures were unchanged at 52,100.0 points.
Tech and chip selloff drags indexes - Major U.S. equity gauges fell sharply on Tuesday, with the Nasdaq Composite retreating 2.2%, the S&P 500 closing down 1.4%, and the Dow Jones Industrial Average losing 0.1%. Losses were concentrated in technology and chip stocks, while investors rotated into defensive and cyclical areas such as financials, utilities, and healthcare, which helped limit declines in the Dow.
The Philadelphia Semiconductor Index suffered the heaviest damage, plunging nearly 8% for the session as investors sold positions across the sector.
Pressure on chip stocks was amplified by developments in South Korea. The KOSPI index dropped 10% amid steep declines for leading memory-chip makers. Samsung Electronics Co Ltd (KS:005930) and SK Hynix Inc (KS:000660) each slid by more than 12%, prompting concerns that the artificial intelligence-driven surge in chip demand may have become overcrowded and triggering broad tech selling worldwide.
Micron in focus ahead of earnings - Micron Technology Inc (NASDAQ:MU), one of the largest memory-chip producers globally alongside Samsung and SK Hynix, was hit hard in the selloff. Its shares fell 13.2% on Tuesday, mirroring the slump in its South Korean peers. In after-hours trading, Micron stock recovered some ground and rose 3.5%.
Micron is scheduled to report fiscal third-quarter results after the bell on Wednesday evening. The upcoming report will be closely watched for signs about demand tied to artificial intelligence applications, which has been a major tailwind for memory-chip firms over the past year. At the same time, market participants are mindful that high expectations for AI-driven revenue and profit could make guidance a focal point for investor reaction.
Consensus estimates referenced in the market expect Micron to post earnings per share of $19.92 on revenue of $34.66 billion for the three months ended May.
Macroeconomic calendar and monetary policy implications - Beyond corporate earnings, attention this week centers on U.S. data that could influence Federal Reserve policy. The personal consumption expenditures (PCE) price index for May - the Fed’s preferred inflation gauge - is due on Thursday. The reading is widely anticipated to factor into decisions on interest-rate policy, with markets wary that persistently high inflation could reinforce a stance of unchanged rates or even further hikes later in the year. Higher rates typically weigh on expected returns for growth-oriented sectors, including technology.
Also scheduled for Thursday is the final reading of first-quarter gross domestic product, which market observers expect to reflect some economic headwinds linked to the U.S.-Iran conflict that began in late-February.
Geopolitics, oil and shipping - Traders continue to monitor developments in U.S.-Iran peace talks, which have presented mixed signals and contributed to market caution. At the same time, improving shipping activity through the Strait of Hormuz has pushed oil prices down further, moving them closer to levels seen before the outbreak of the conflict. Positive purchasing managers index data released recently offered additional, albeit limited, support to risk assets.
Outlook - Markets are likely to remain sensitive to earnings surprises from key technology and chip firms, the PCE inflation print, and the updated GDP figures. Given the heavy losses in semiconductors and technology stocks this week, investors will be watching how companies and policymakers address the interplay between AI-driven demand and broader macroeconomic pressures.