Wall Street's main indexes were set to open lower on Thursday as uncertainty about a trade war unleashed by U.S. tariffs clouded sentiment, while chip stocks slid after Marvell's forecast fanned worries of slowing demand for AI infrastructure.
At 8:43 a.m. ET, Dow E-minis were down 368 points, or 0.85%, S&P 500 E-minis were down 66.75 points, or 1.14% and Nasdaq 100 E-minis were down 315 points, or 1.52%.
Marvell (MRVL.O) fell 17.6% in premarket trading after the chipmaker forecast first-quarter sales in line with analysts' average estimate, which failed to excite investors who had expected stronger AI-driven growth.
Peer Broadcom (AVGO.O), which is expected to report quarterly results after markets close, fell 4.5%, while Nvidia (NVDA.O) lost 3.2% and Advanced Micro Devices (AMD.O) dropped 2%.
Megacaps such as Microsoft (MSFT.O) and Meta (META.O) declined over 1% each.
Concerns about overspending and overcapacity in the U.S. AI industry, in the face of China's cheaper DeepSeek models, paused Wall Street's bull rally in January. The tech-heavy Nasdaq (.IXIC) is now down about 9% from its record high hit in December.
Further, Alibaba's U.S-listed shares rose 1.9% after the release of a new reasoning model that the conglomerate said was on par with global hit DeepSeek's R1.
On the trade front, President Donald Trump exempted automakers that comply with existing free trade agreement and sources said the negotiations were ongoing. However, Trump made it clear that he was not calling off his trade war, citing the need for more border controls.
Automakers such as General Motors (GM.N) and Ford (F.N) were down over 1.5% each after Wednesday's rise. Tesla (TSLA.O) fell 2.5% following a report that brokerage Baird named the electric carmaker a 'bearish fresh pick'.
Against the backdrop of trade uncertainty, U.S. stocks have witnessed increased volatility over the past few sessions.
"We're still continuing to see headline risks from the development of tariffs on Mexico and Canada drive U.S. stock prices and until we can get some clarity, we're going to expect some volatility there," said Charlie Ripley, senior investment strategist at Allianz Investment Management
Wall Street's main indexes closed higher over 1% on Wednesday following Trump's announcement. However, the benchmark S&P 500 (.SPX) is close to levels seen during Trump's election victory and the Russell 200 index (.RUT) has fallen over 7% since early November. Futures tracking the domestically focused index fell 1.3% on Thursday.
Multiple reports have suggested that tariff uncertainty has resulted in individuals holding back on consumption and corporate executives staying put on investment decisions, sparking concerns of an impending economic slowdown as inflation stays elevated.
On Thursday, a report that showed weekly jobless claims stood at 221,000 in the week before, lower than expectations of 235,000 allayed some worries about an economic slowdown. Friday's key payrolls data will be crucial for investors trying to gauge the economy's health.
Traders now see the Federal Reserve lowering borrowing costs by 25 basis points for the first time this year in June, according to data compiled by LSEG.
Comments from policymakers Patrick Harker, Raphael Bostic and Governor Christopher Waller are due later in the day.
Zscaler (ZS.O) rose 3.3% after raising its fiscal 2025 revenue forecast, signaling increasing demand for its cloud-based cybersecurity services.
Kroger (KR.N) fell 1.5% after its annual profit forecast fell short of expectations.
