Nasdaq futures slide 2% as chip selloff deepens, oil climbs

U.S. stock futures tumbled Friday as a deepening semiconductor rout and escalating Iran conflict drove a broad rotation out of technology and into defensive sectors.

U.S. stock futures extended losses Friday as a deepening semiconductor selloff and escalating Middle East conflict drove investors into defensive sectors. Nasdaq 100 futures slumped 2.2% while S&P 500 futures fell 1.1%, with Dow futures down 0.6%. The moves followed a brutal Thursday session that saw the Nasdaq composite break support as memory-chip stocks plunged.

"The rotation out of tech into defensives is the dominant trade right now," said Lars Skovgaard, investment strategist at Danske Bank. "From a European perspective, there's less exposure towards tech and more exposure to defensives and staples, and that is why it looks a little better."

The selloff was led by semiconductors, with the Philadelphia Semiconductor Index extending its decline after Taiwan Semiconductor Manufacturing Co. — which reported second-quarter profit that blew past forecasts — still saw its shares fall alongside the broader sector. SK Hynix dived, and U.S.-listed memory-chip makers Micron Technology and Sandisk continued to slide. The weakness spread across Asia, where Taiwan's stock market plunged more than 6% for its worst session since President Donald Trump's "Liberation Day" tariffs, while Japan's Nikkei 225 tumbled 4%, leaving it 12% below a recent peak. China's blue-chip CSI 300 fell 3.6%.

Netflix Inc. dropped more than 8% in premarket trading after the streaming giant issued soft third-quarter guidance following a second-quarter sales miss, adding to the tech-sector pressure. SpaceX shares also declined after the company aborted its latest Starship test flight moments before liftoff because of engine issues.

Geopolitical Risk Adds to Pressure

Crude oil prices climbed as the U.S. military launched its sixth consecutive night of strikes on Iranian military facilities, with Iran retaliating by attacking U.S. assets in the Gulf. Brent crude rose 0.6% to $84.75 a barrel, while West Texas Intermediate advanced 1.1% to $79.80. The escalation pushed the CBOE Volatility Index higher, with the VIX rising above its trailing one-year average as traders priced in heightened uncertainty.

The U.S. 10-year Treasury yield edged lower as investors sought safe-haven assets, while the dollar index held steady. Consumer staples stocks — traditionally a defensive haven — rallied Thursday and pointed higher in premarket trading Friday, underscoring the breadth of the rotation out of growth-oriented sectors.

Federal Reserve Vice Chair Philip Jefferson added to the cautious tone, signaling that sticky inflation could delay further policy easing. Jefferson said the Federal Open Market Committee could reconsider its current 3.5%-3.75% target range if inflation fails to cool, citing lingering pressure from past tariffs and energy costs.

Traders now face a critical question: whether the tech selloff represents a healthy correction in an overextended AI trade or the beginning of a broader de-rating driven by geopolitical risk and sticky inflation. The next major catalyst comes next week with a fresh round of earnings from megacap technology companies, which will test whether fundamentals justify the sector's stretched valuations.

This article is for informational purposes only and does not constitute investment advice.