0855 ET - S&P futures are building onto earlier gains following weaker job creation in June. Non-farm payrolls grew by 57,000 last month,below the 115,000 economists polled by WSJ expected. May's payrolls were also revised down to 129,000 from 172,000. The jobless rate ticked down to 4.2% from 4.3%. The weaker-than-expected report could mean that the Federal Reserve may be less likely to raise rates sooner rather than later. The Fed recently adopted a more hawkish tone with regard to inflation triggered by rising energy costs, leading markets to believe a rate hike could be in the cards. S&P futures are up 26 points. (patrick.sheridan@wsj.com)
0849 ET - Treasury yields and the dollar slide as the U.S. economy creates fewer jobs than expected in June. The BLS reports jobs growth at 57,000, lower than WSJ consensus of 115,000. May's figure is revised down to 129,000 from 172,000, and April's to 148,000 from 179,000. June's unemployment rate ticks lower to 4.2% from 4.3%. The data runs against expectations of Fed hikes that help support the dollar. Weekly jobless claims fall slightly, to 215,000 from an upwardly revised 216,000, versus expectations of 220,000. The WSJ Dollar Index is down 0.7%. The 10-year yield falls to 4.461% from 4.505% before the data. The two-year drops to 4.108% from 4.191%. (paulo.trevisani@wsj.com; @ptrevisani)
0530 ET - AI earnings could start to fall short of expectations, undermining both equity prices and the capital expenditure boom, economists at Capital Economics say in a research note. The economists think equity prices may have a bit further to rise in the near term but will eventually pull back, with the S&P 500 estimated to fall to 6500 by end-2027. AI demand may continue to grow, but at a slower pace than expected, as firms likely underestimate the barriers to AI adoption, CE says. Meanwhile, AI-related revenue will likely be weighed by a decline in prices driven by increased competition and innovation. AI capital spending could slow down as a result, as hyperscalers prioritize projects with clearer near-term monetization, CE adds. (sherry.qin@wsj.com)
0424 ET - Shares of European semiconductor companies opened lower a day after Federal Reserve Chairman Kevin Warsh declined to say whether the central bank needed to consider a rate increase later this month. Tech stocks are increasingly sensitive to rate decisions due to high valuation and debt-funded AI infrastructure spending. Chip stocks skidded Wednesday after Warsh said that anyone expecting the Fed would tolerate inflation running above its 2% goal "would be disappointed." The slide extended into Asia and Europe on Thursday. Shares of Dutch semiconductor-equipment maker ASML Holding and smaller rival ASM International are down 3.7% and 4.8%, respectively. German chip maker Infineon Technologies is down 3.3%. STMicroelectronics shares are down 1.7%. (mauro.orru@wsj.com)
0214 ET - Some non-AI sectors could offer better portfolio resilience as Big Tech and semiconductor stocks become more volatile, Saxo Markets chief investment strategist Charu Chanana says in a note. While AI is still the most important long-term investment theme, the AI trade positioning has become increasingly crowded, making them swing wildly in both directions, she says. Instead of abandoning AI stocks, investors need to rebalance oversized AI winners and reduce mega-cap concentration, she says. Chanana thinks healthcare could be a good hedge, as the sector is trading below the broader market and has different earnings drivers from tech. (sherry.qin@wsj.com)