A record-breaking run in chip equities saw $2 trillion flow into the combined valuations of Micron, Intel, and AMD last quarter
I-Hwa Cheng/Bloomberg via Getty Images
U.S. stock futures slumped to start the third quarter on Wednesday, with traders focused on comments from Federal Reserve Chairman Kevin Warsh that could signal the path of interest rates. Dow Jones Industrial Average futures were down 105 points, a decline of 0.2%, with S&P 500 futures off 0.2% and Nasdaq $NDAQ futures 0.4% lower.
The pullback follows a strong first half of 2026. A gain of 8.9% for the Dow over the January-through-June stretch represented the index's strongest first-half result in five years. The S&P 500 rose 9.6% and the Nasdaq gained 12.8% over the same period. A nearly 22% gain for the Russell 2000 marked the index's best first half since 1991, according to CNBC.
Chip stocks were a major driver of those gains. A record-breaking run in chip equities saw $2 trillion flow into the combined valuations of Micron $MU, Intel $INTC, and Advanced Micro Devices between April and June.
Paul Hickey, co-founder of Bespoke Investment Group, told CNBC's "Closing Bell: Overtime" on Tuesday that the group still holds long-term promise but cautioned against chasing it at current levels. "Over the long term, we still like the semis, but I wouldn't be aggressive towards it here," he said. "So I think in that respect they've gotten a little bit…extended. So I would maybe take a breather here."
At 9 a.m. ET, an ECB conference in Sintra, Portugal, will feature Warsh alongside the leaders of the European Central Bank, the Bank of England, and the Bank of Canada for a panel discussion. Market participants have priced in the possibility that the Fed could move to lift borrowing costs as policymakers continue fighting inflation, according to the outlet. Wednesday brought minimal movement in U.S. Treasury yields, which had climbed the prior session after robust job-openings figures strengthened arguments for tighter monetary policy.
The possibility of additional interest rate increases pushed gold beneath the $4,000-per-troy-ounce threshold. Against the dollar, the yen weakened to levels not seen in four decades, raising the prospect of a currency intervention by Japanese authorities. Crude markets retreated, with Brent falling 0.78%, after reports emerged that President Donald Trump had indicated to advisers he was comfortable letting Iran nuclear talks run beyond an Aug. 18 deadline, easing fears of a fresh outbreak of hostilities in the region.
The economic calendar for the day includes June figures for the ADP employment survey, ISM manufacturing, and the final global PMI manufacturing reading.
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