Nasdaq Futures Drop 0.6% as Microsoft Slides and ADP Reveals 32,000 Job Losses

By Matej Prša

U.S. equity futures faced downward pressure on Wednesday as concerns over the technology sector and a grim labor market report weighed on sentiment. While investors are eyeing a potential year-end rally, premarket trading was dominated by a slide in major tech names and unexpected economic data.

Futures tied to the Nasdaq 100 declined 0.6%, while S&P 500 futures fell 0.2%. The blue-chip Dow Jones Industrial Average futures dropped 76 points, or 0.2%, as traders assessed the implications of a cooling economy.

Microsoft leads tech decline

The primary weight on the tech-heavy Nasdaq was Microsoft, which saw its shares turn red in premarket trading. The stock dropped 2% following a report by The Information stating that the tech giant was cutting software sales quotas tied to artificial intelligence.

This news dampened enthusiasm in the sector, even as other AI beneficiaries like Nvidia had seen gains in the previous session.

This pullback in Microsoft highlights the market’s high sensitivity to news regarding AI monetization, a key driver of stock valuations throughout the year.

Private payrolls surprise with losses

Adding to the complex market picture, payroll processor ADP released data showing that private payrolls unexpectedly declined by 32,000 in November. This figure was a stark miss compared to the gain of 40,000 expected by economists polled by Dow Jones.

Despite the negative reading on the economy, market reaction was mixed. Traders appeared to be betting that these private job losses could effectively clinch a Federal Reserve rate cut at the central bank’s final meeting of the year next week. The logic remains that a softer labor market gives the Fed more room to ease monetary policy.

Crypto resilience and retail movers

While equities struggled, the crypto market showed resilience. Bitcoin continued to rise on Wednesday, trading above the $92,000 level. This recovery comes just one day after the flagship cryptocurrency logged its worst trading day since March, suggesting that digital asset investors are shrugging off recent volatility.

In the equity market, not all sectors were in the red. Shares of Marvell Technology gained more than 9% as Wall Street reacted positively to its data center growth projections. Similarly, American Eagle Outfitters rallied more than 13% after the retailer lifted its full-year forecast, citing a strong start to the holiday shopping season.

Expert outlook on year-end trends

Investors are currently gauging the possibility of a traditional December rally. Historically, December trading bodes well for U.S. stocks, though November proved to be a downbeat month as profit-taking trimmed valuations for high-flying names.

Despite current headwinds, some strategists remain optimistic about the underlying fundamentals. Speaking on CNBC’s “Power Lunch” Tuesday, Wells Fargo chief equity strategist Ohsung Kwon noted that AI earnings are likely to remain robust. Kwon said:

“I think AI earnings are going to continue to be strong… We’re going to see more contribution from more beaten-down sectors, and we’re starting to see some of the more short-cycle industrials and more beaten-down sectors starting to see better pricing power.” 

He added: “I don’t think it’s a bubble yet.”

Source:: Nasdaq Futures Drop 0.6% as Microsoft Slides and ADP Reveals 32,000 Job Losses