Nasdaq futures edge lower as AI spending, Fed rate concerns weigh

Investing.com-- U.S. stock futures edged lower on Thursday evening, with Nasdaq futures under pressure as investors remained cautious about technology valuations and the cost of financing artificial intelligence infrastructure.

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S&P 500 Futures inched 0.1% lower to 7,786.75.0 points, while Nasdaq 100 Futures fell 0.4% to 30,019.75 points by 20:50 ET (00:50 GMT). Dow Jones Futures traded 0.1% higher at 52,481.0 points.

In the regular session, the Dow Jones Industrial Average climbed 1.1%, as investors rotated into defensive sectors, including healthcare and consumer goods. The S&P 500 rose 0.3%, while the NASDAQ Composite gained just 0.1%.

The rebound followed a technology-led sell-off in the previous session, triggered by hotter-than-expected U.S. consumer inflation data that revived concerns about further Federal Reserve interest-rate increases.

However, technology shares remained vulnerable as investors questioned whether robust demand for artificial intelligence would justify the enormous spending on data centres, chips and cloud infrastructure, particularly as borrowing costs rise.

The technology sector's weakness persisted despite Taiwan Semiconductor Manufacturing Company's record quarterly profit, as the world's largest contract chipmaker struck a cautious tone on its 2027 outlook because of macroeconomic uncertainties.

Nvidia (NASDAQ:NVDA) fell 1.8% on Thursday, while server makers Dell Technologies (NYSE:DELL) and Hewlett Packard Enterprise (NYSE:HPE) dropped 6.9% and 7.1%, respectively. The Philadelphia Semiconductor Index fell 0.9%, extending its losing streak to seven sessions.

Concerns about debt-financed AI expansion also weighed on sentiment.

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Data centre operator CoreWeave Inc (NASDAQ:CRWV) has come under scrutiny over its heavy borrowing and capital spending, while Oracle (NYSE:ORCL) and other AI infrastructure companies have faced pressure as investors reassess the sustainability of spending on computing capacity.

Moreover, reports on Thursday showed that Anthropic told prospective investors that third-quarter revenue rose 45% to $16.8 billion from $11.6 billion in the previous quarter

The disclosures come as investors are increasingly scrutinising whether revenue growth can justify the substantial capital commitments required to develop and operate advanced Calude models.

Inflation remained a key concern for markets. Data on Thursday showed U.S. producer prices rose more than expected in September, with the increase marking the largest in four and a half years, suggesting price pressures were broadening beyond energy.

The data followed Wednesday's hotter-than-expected consumer price report, which had prompted investors to reassess the Federal Reserve's policy outlook.

However, Treasury yields retreated sharply on Thursday, with the benchmark 10-year yield falling to around 5.09%, easing some pressure on equity valuations.

Markets priced in a 67% probability of a Fed rate increase by December, according to CME Group's FedWatch tool, Reuters reported.

Investors also assessed September retail sales, weekly jobless claims and business surveys for further clues about the strength of the economy and the likely path of interest rates.

The ongoing third-quarter earnings season remained another focus.

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