The Nasdaq composite index broke a key support level on Tuesday, triggering a broad sell-off in AI-related stocks. Despite the downturn, Dow Jones futures edged higher in early Wednesday trading. AI chip IPO Cerebras and logistics giant FedEx both tumbled in late trading after reporting their quarterly results.
The breakdown of support suggests a shift in market sentiment, particularly for high-growth technology names that have driven much of 2024's rally. The weakness comes as investors reassess valuations amid rising bond yields and uncertainty over the pace of Federal Reserve rate cuts. South Korea's Kospi index rebounded, offering a mixed picture for global risk appetite.
FedEx reported revenue of $22.2 billion for its fiscal second quarter, missing analyst estimates. The company also lowered its full-year earnings forecast. Cerebras, which went public in October, posted a wider-than-expected loss, though revenue grew 169% year over year to $52.7 million. Micron Technology is due to report earnings later this week, with analysts watching for signals on memory chip demand.
All eyes now turn to Micron's results, which could set the tone for semiconductor stocks. A miss from FedEx and Cerebras has already pressured the transport and AI sectors. If Micron disappoints, the Nasdaq sell-off may deepen. Conversely, strong results could restore some confidence in tech and AI spending.
"The sell-off in AI names is a healthy correction after a long run-up, but it doesn't signal the end of the AI trade," said a market strategist. "Investors are just being more selective."