July 16 (Reuters) – U.S. stock index futures were subdued on Thursday as investors paused after a two-day rally, while chip stocks remained under pressure ahead of fresh economic reports and another batch of quarterly results.
Chip stocks extended declines from the previous session when investors rotated into megacap technology names and banks following strong results from major lenders.
U.S.-listed shares of TSMC fell 3.2% in premarket trading, even after the advanced AI chipmaker reported a 77% jump in second-quarter profit that topped market expectations. The company also said it would invest an additional $100 billion in the United States.
Memory-chip makers were among the biggest decliners, with Western Digital and Seagate Technology down 3.9% and 3.3%, respectively.
Wall Street’s main indexes rose for a second straight session on Wednesday after a softer-than-expected Producer Price Index reading eased inflation concerns and reduced worries over tighter Federal Reserve policy. The report followed benign consumer inflation data earlier in the week.
A strong start to the second-quarter earnings season also supported sentiment, even as U.S.-Iran tensions simmered in the background.
“While geopolitical dynamics may trigger setbacks, earnings should remain the key driver of performance for the remainder of the year,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
“In fact, with the U.S. second-quarter earnings season kicking off with solid beats, we expect another strong set of results in the coming weeks.”
At 5:18 a.m. ET, Dow E-minis were down 9 points, or 0.02%, and S&P 500 E-minis were down 1 point, or 0.01%. Nasdaq 100 E-minis were down 63.75 points, or 0.21%.
Moving ahead in the day, investors will be looking to retail sales data and jobless claims at 8:30 a.m. ET for further signs of whether the economy is slowing enough to keep inflation under control without sparking growth concerns.
Markets are currently pricing in a 10.2% likelihood that the Fed will implement a 25-basis-point rate hike at this month’s monetary policy meeting, according to CME’s FedWatch tool.
The benchmark S&P 500 has climbed more than 10% this year and remains near its June record close, leaving the rally vulnerable to any disappointment in data or earnings.
United Airlines fell 2.3% as a renewed surge in oil prices weighed on its third-quarter and full-year profit outlooks.
Further on the earnings front, UnitedHealth will report its results before the bell and Netflix is scheduled to report its after the market’s close.
(Reporting by Ragini Mathur in Bengaluru; Editing by Maju Samuel)
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