US stock futures edged higher on Wednesday, signalling a flat-to-slightly positive start to trade on Wall Street, a day after a sharp tech-led sell-off dragged software and mega-cap stocks lower.
Dow Jones Futures traded 0.33% higher at 49,512, while S&P 500 futures were trading higher at 6,962.75, up 0.31%, indicating that the US stock market could open higher.
Microsoft gained 0.2% in pre-open trade while Nvidia was higher by 0.37%. Amazon added 0.4% and Meta Platforms 0.14%
Why did tech stocks fall?
The latest selloff in tech stocks was sparked by Anthropic after it said it was launching a new artificial intelligence (AI) tool servicing legal work, threatening software firms.
The overnight rout in US and European markets is extending to Asian trading today, resulting in a $285 billion selloff across the software, financial services and asset management sectors globally, as per a Bloomberg report.
Anthropic has released a number of plugins for its Claude Cowork product that could automate tasks across legal, sales, marketing and data analysis, raising worries that advances in artificial intelligence could upend companies’ business models.
AI heavyweights like Nvidia and Microsoft each fell almost 3% last night. Alphabet dropped 1.2%, and Amazon declined 1.8%. Meanwhile, the US benchmark indices S&P 50 and Dow Jones lost 0.84% and 0.34%, respectively. And tech-heavy Nasdaq ended 1.43% down.
Back home, Indian IT services firms, although seen as an anti-AI trade, also faced a setback, shedding up to 8% today. The new tool launched by Anthropic is seen automating tasks traditionally outsourced to companies back home, raising doubts about the sustainability of the human-intensive business model and triggering risk-off selling.
The tech rout comes amid wider concern that a tech bubble could burst, posing financial stability risks.
JP Morgan analyst Toby Ogg was quoted as saying by Reuters that investors were focused on long-term growth questions that stretch far beyond traditional three-year forecasts. “The sector isn’t just guilty until proven innocent, but is now being sentenced before trial,” he said.
(With inputs from agencies)
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