Nasdaq-100 futures rose 0.18% overnight after a sharp selloff in semiconductor stocks on Thursday, while S&P 500 futures remained flat and Dow futures slipped 0.16%. The rebound in tech futures followed a session where the Nasdaq Composite dropped 694 points, a decline of 2.6%, while the S&P 500 fell 1.21% and the Dow Jones Industrial Average closed nearly flat.
The decline in chip stocks was driven by supply chain warnings from LAM Research. CEO Tim Archer stated during an earnings call that going into 2027, the company expects supply chain constraints for certain components to continue limiting the ability of chip makers and equipment companies to fully meet end demand. This sentiment weighed heavily on major semiconductor names, with Nvidia Corp., Micron Technology Inc., and Advanced Micro Devices Inc. all ending the session in red.
Exchange-traded funds tracking the sector saw significant losses. The iShares Semiconductor ETF (SOXX) fell nearly 7% at the close, while the Direxion Daily Semiconductor Bull 3X Shares (SOXL) plunged more than 20%. The VanEck Semiconductor ETF (SMH) also declined nearly 6%. Yardeni Research highlighted the disparity between earnings growth and valuation, noting on X that semiconductor earnings are up 176% year-over-year, yet the industry's P/E has collapsed to 14.2.
Despite the volatility, some analysts remain bullish on the artificial intelligence trade. Dan Ives, Partner and Senior Managing Director at Yorkville Ives, posted on X that recent earnings do not support market fear but rather increase bullish conviction on the AI thesis into year-end and 2027. He noted that Alphabet, Microsoft, and Amazon are expected to confirm massive capital spending paths next week.
Geopolitical tensions in the Middle East further complicated the market backdrop. Iran warned of launching an offensive attack, with IRGC spokesman Hossein Mohebi stating that the country's defense doctrine has shifted from purely defensive to one that includes launching offensive responses to attacks. U.S. President Donald Trump told reporters on Wednesday that the U.S. was no longer negotiating with Iran and that something would happen fairly soon. Media reports indicate that the U.S. and Israel are planning potential attacks on Iran in the coming weeks.
Oil prices responded to the escalating risks. Brent crude futures traded at $113.97 a barrel, up 0.49%, while WTI crude futures rose 0.59% to $100.31 per barrel. Brett Erickson, Managing Principal at Obsidian Risk Advisors, questioned on X how high oil prices might rise if all-out strikes occur and Iran retaliates.
Precious metals also saw significant movement. The iShares Silver Trust (SLV) plunged more than 5% at Thursday's close, while the SPDR Gold Shares ETF (GLD) fell more than 2.6%. Bloom Energy Corp. (BE) shares dropped nearly 9% after third-quarter results raised concerns about capital expenditure and cash flow.
In other market moves, the 10-year U.S. Treasury yield fell below 5% to 4.966%, while the 30-year yield stood at 5.292%. Asian equity markets opened lower on Friday, with indices in South Korea, Japan, China, and Australia all trading in negative territory.