Traders work on the floor at the New York Stock Exchange on June 14, 2024.
Brendan Mcdermid | Reuters
U.S. stock futures inched higher Wednesday evening after the Nasdaq Composite‘s worst session since 2022 amid investors’ rotation out of big tech high-flyers.
Dow Jones Industrial Average futures rose 48 points, or 0.12%. S&P 500 futures and Nasdaq 100 futures climbed 0.15% and 0.27%, respectively.
In extended trading, Discover Financial popped more than 4% after its second-quarter results topped expectations. Beyond Meat tumbled 15% after The Wall Street Journal reported, citing people familiar, that the meat substitute company is meeting with bondholders to begin discussions about restructuring its balance sheet.
The rotation trade continued Wednesday during the regular trading session. The tech-heavy Nasdaq tumbled 2.8% in its worst day since December 2022, closing below 18,000 for the first time since July 1. The S&P 500 dropped 1.4%.
However, the blue-chip Dow, which has less exposure to the tech trade than the other two indexes, outperformed. The 30-stock index gained 243.6 points, or 0.6%, closing above 41,000 for the first time ever.
Wall Street has been dumping shares of this year’s artificial intelligence beneficiaries as the growing likelihood of a September rate cut bolstered optimism in the broader market. The Russell 2000 declined 1% on Wednesday, but the small-cap index has jumped more than 9% in the last five trading days.
Investors have been hoping for a broadening market amid concerns that the tech-driven rally is running out of steam. However, some expect the change in leadership may not be enough to protect stocks from challenges ahead, including the possibility of an economic slowdown.
“This is a market — a Fed pivot market — two, three months before we expect a cut, exactly as we’d expect to see it. A lot of uplift in areas like small caps, other areas of the risk market where capital is really unlocking,” Lauren Goodwin, chief market strategist at New York Life Investments, said Wednesday on CNBC’s “Closing Bell.”
“But the reality for the market is that we’ve already been in a soft landing for the next nine months. And so as we look to why the Fed is cutting rates, and the market starts to catch up with that reality, might be a couple of months from now, but we expect that the economy is still liable to slow,” Goodwin added.
On the economic front, jobless claims for the week ending July 13 are due Thursday morning. Economists are expecting to see claims come in at 229,000, per Dow Jones. That’s up from 222,000 the week before.
On the earnings front, Domino’s Pizza and Alaska Air are set to report Thursday before the open. Netflix is expected to report results after the close.