The U.S. stock index futures took a significant hit in evening trading on Sunday due to concerns surrounding an economic slowdown. This was further compounded by profit-taking in the technology sector, leading to a decline in major indices. S&P 500 Futures dipped by 0.9% to 5,329.0 points, and Nasdaq 100 Futures saw a 1.4% drop to 18,302.0 points. The Dow Jones Futures also fell by 0.5% to 39,680.0 points, setting a bleak tone for the week ahead.
The decline in stock futures came on the heels of fears of economic slowdown gripping investors. Weak readings in business activity and the labor market raised concerns that the Federal Reserve had delayed interest rate adjustments for too long. The disappointing nonfarm payrolls data for July further confirmed these fears, signaling a significant softening in the labor market. Although the prospects of more rate cuts provided a glimmer of hope, it failed to boost investor confidence in risk-driven assets.
Technology stocks bore the brunt of the sell-off, with the NASDAQ Composite plummeting by 2.4% to 16,776.16 points on Friday. This index was now more than 10% below its previous record high, reflecting the severity of the decline. The broader market also suffered, with the S&P 500 dropping by 1.8% to 5,346.56 points, and the Dow Jones Industrial Average declining by 1.5% to 39,737.26 points.
Following the recent Fed meeting where interest rates were kept steady but a potential cut was signaled for September, investors are keenly awaiting insights from various Fed speakers this week. Additionally, key economic data such as non-manufacturing purchasing managers index from the Institute of Supply Management is set to be released on Monday. Market watchers will also keep a close eye on corporate earnings reports, with bellwether companies like Caterpillar Inc and Uber Technologies Inc scheduled to announce results. Super Micro Computer Inc, which experienced a valuation surge on AI hype, is also in the earnings lineup, along with media giants Walt Disney Company and Warner Bros Discovery Inc scheduled for later in the week.