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S&P 500, Nasdaq futures slip after chipmaker Micron’s warning

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Nasdaq and S&P futures fell on Tuesday after a dismal forecast from Micron Technology dragged chip stocks lower, while investors remained cautious ahead of inflation data that will feed into the U.S. Federal Reserve’s rate hike plans.

A high inflation print, following last week’s strong jobs numbers, will likely push the Fed to continue with jumbo rate hikes and weigh on a recent recovery in stocks.

Traders are expecting a 67.5% chance of the Fed raising rates by 75 basis points in September, its third such hefty hike.

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Bank stocks edged higher in trading before the bell, tracking a rise in U.S. Treasury yields on rate hike expectations.

Growth and technology stocks, whose valuations are sensitive to rising bond yields, slipped, with Tesla Inc and Apple Inc down 0.6% each.

Micron Technology Inc fell 4.6% as the memory chip maker said its free cash flow was expected to be negative for the fiscal first quarter and that it could see significant sequential declines in revenue and margins due to a fall in shipments.

Peers Nvidia and Advanced Micro Devices fell 3.3% and 1.9%, respectively, extending the previous session’s sharp declines after a similar revenue warning from Nvidia.

At 06:44 a.m. ET, Dow e-minis were down 3 points, or 0.01%, S&P 500 e-minis were down 8.5 points, or 0.21%, and Nasdaq 100 e-minis were down 72 points, or 0.55%.

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Despite a choppy recovery since mid-June, the benchmark S&P 500 index is still down 13% this year after hitting a record high in early January as surging prices, hawkish central banks, geopolitical tensions continue to weigh on investor sentiment.

Stronger-than-expected earnings from corporate America have been a positive, with 77.5% of S&P 500 companies beating earnings estimates, according to I/B/E/S data from Refinitiv on Friday.

Novavax, however, dropped 31.6% after the drugmaker halved its full-year revenue forecast as it does not expect further sales of its COVID-19 shot this year in the United States in the face of a global supply glut and soft demand. (Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Saumyadeb Chakrabarty)

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