Wall St futures slip as tech losses mount ahead of key inflation data

• Major chip stocks including Nvidia, Broadcom, and Micron fell 2-3.6% in premarket trading, continuing a selloff triggered by Broadcom's disappointing outlook that raised valuation concerns
• May consumer price data due at 8:30 a.m. ET is expected to show 4.2% year-over-year inflation, up from 3.8% in April, with investors watching for impacts from rising energy costs amid Middle East tensions
• U.S. military strikes on Iranian targets following the downing of an Apache helicopter have escalated geopolitical risks, while the upcoming $1.75 trillion SpaceX listing could further pressure tech-heavy markets

Market Summary: U.S. Futures Decline on Tech Weakness and Inflation Concerns

U.S. stock index futures dropped Wednesday morning, with the Dow down 0.65%, S&P 500 falling 0.76%, and Nasdaq declining 1.17%. Technology stocks led losses as investors braced for critical May consumer price index (CPI) data due at 8:30 a.m. ET.

Tech Sector Under Pressure

Major chip stocks extended their selloff in premarket trading, with Nvidia, Broadcom, and Micron Technology falling 2% to 3.6%. The weakness follows Friday's steep decline triggered by Broadcom's disappointing outlook, raising concerns about stretched valuations in the semiconductor sector. Super Micro Computer plunged 8.5% after announcing equity fundraising plans for AI server component purchases.

UBS Global Wealth Management's Mark Haefele attributed tech weakness to higher interest rate expectations—which reduce the present value of future earnings—combined with valuation anxiety and AI monetization uncertainties following a strong rally.

Inflation Focus

Economists surveyed by Reuters expect May CPI to show a 4.2% year-over-year increase, the largest since April 2023 and up from April's 3.8%. The report will be scrutinized for signs that rising energy costs from Middle East tensions are fueling inflation, particularly after last week's stronger-than-expected jobs data intensified Fed rate hike concerns.

Geopolitical Risks

U.S.-Iran tensions escalated after American military strikes on Iranian targets following the downing of a U.S. Apache helicopter. Brent crude traded above $91 per barrel.

Additional Concerns

SpaceX's anticipated $1.75 trillion IPO on Friday, targeting a record $75 billion raise, could further pressure tech stocks amid mounting concerns over excessive sector optimism.