S&P 500 futures turn negative as tech shares fall again in premarket trading

U.S. stock futures bounced a bit on Friday following a big tech-fueled sell-off as traders awaited the release of key jobs data. 

Dow Jones Industrial Average futures added 120 points, or 0.4%. S&P 500 futures rose marginally. But tech stocks remained weak a second day. Futures for the tech-heavy Nasdaq-100 lost 1.1%.

The Dow slid more than 800 points, or 2.8%, on Thursday for its biggest one-day decline since June. The S&P 500 plunged 3.5% and the Nasdaq Composite dropped 5%. Thursday’s declines also wiped out the major averages’ gains for the week and knocked both the S&P 500 and Nasdaq off record levels.

As a sector, tech had its worst day since March, falling 5.83%. Apple contributed a big portion of those losses, falling 8%. Facebook, Amazon, Netflix, Alphabet and Microsoft also closed Thursday’s session sharply lower.

In premarket trading Friday, Apple was lower by 2.5%. Tesla, which plunged 9% on Thursday, fell by 5% in the premarket. Facebook, Amazon and Netflix were also in the red in early trading. 

The steep declines in tech shares come after the space drove the lion’s share of the broader market’s comeback off the coronavirus sell-off lows. Since March 23, the S&P 500 tech sector is up about 70%. For the year, tech has rallied more than 30%.

However, some investors have raised concern about the heavy concentration of gains in just a few stocks as it could make the broader market susceptible to a pullback if those names were ever in trouble.

“We’ve had excessive valuations in the markets lately — particularly in the tech sector — and that needed to be corrected to some degree,” said Scott Knapp, chief market strategist at CUNA Mutual Group. “One needs to look no further than the recent irrational run-up in Tesla and Apple share prices after both companies announced a stock split to see overexuberance, especially among retail investors.”

Both Tesla and Apple rallied recently after announcing stock splits.

Dow futures were stronger as investors bid higher plays on the reopening of the economy. Shares of Boeing, airlines and cruise lines were higher in the premarket. Bank stocks like Citigroup and Morgan Stanley were also higher in premarket trading.

Traders also braced for the release of a key U.S. jobs report. Economists polled by Dow Jones expect the U.S. economy to have added more than 1 million jobs last month.

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