Investing.com – Futures linked to the main U.S. stock indices are mixed, after tech stocks sank in the prior session on growing jitters over the artificial intelligence trade. Anxieties surround the hunt for the capital needed to fund Silicon Valley’s rapid AI buildout. At the same time, fears of intensifying violence in the Middle East keep oil prices elevated, while ructions in French bonds also hit sentiment.
1. Futures mixed
U.S. stock futures hovered around both sides of the flatline on Friday. By 03:01 ET (07:01 GMT), the S&P 500 futures contract was mostly unchanged, while Nasdaq 100 futures had risen by 45 points, or 0.2%. The Dow futures contract slipped by 149 points, or 0.3%.
The main averages were broadly lower on Thursday, with the Nasdaq Composite slumping by 2.6% — the worst day for the tech-heavy index since June.
In a note to clients, analysts at Deutsche Bank said “the wobbles of recent weeks all collided at once.”
First, the analysts pointed to stress in French bonds as the country grapples with social unrest and a precarious fiscal position. Yields in French debt climbed sharply, sending the spread between French and German bonds, a key European benchmark, up to its biggest daily widening since the early days of the COVID-19 pandemic in March 2020.
While these moves were part of a “clear risk-off pattern,” they did not spark a global selloff in bonds, the analysts noted.
2. AI anxieties rise
Instead, investors actually flocked to the relative safety of U.S. Treasuries, pushing the benchmark 10-year yield back down below 5%. Yields tend to move inversely to bond prices.
Traders were spooked by Meta Platforms’ decision to roll out a new class of shares, partially as a strategy to help raise funds for its AI ambitions. Like other Big Tech names, the Instagram-owner has laid out plans to spending hundreds of billions on developing its AI capabilities, but have had to incur mounting debt loads to do so.
With borrowing costs expected to rise in the coming months, tech groups are anticipated to sell stock to underpin the next AI spending round. Fears have abounded that such dilution could dent share prices. Meta’s stock price slipped 7%, its largest decline since July.
Further compounding these worries, Nvidia CEO Jensen Huang told CNBC that there is “a scarcity of capital” for the AI buildout, adding “the demand for capital is much greater than the availability.” Nvidia shares retreated, as did those of peer Advanced Micro Devices. A tracker of the semiconductor industry shed 6.7%.
