Wall Street Mixed as Chip Stocks Continue Sell-Off; Oil Prices Dip

Wall Street traded in a mixed fashion early Thursday, with further declines in chip stocks and a dip in oil prices reflecting ongoing market shifts. Futures for the S&P 500 were unchanged, Dow Jones Industrial futures edged up 0.2%, and Nasdaq futures fell 0.4% before the market open.

Chipmakers experienced another day of losses following a significant sell-off on Wednesday. Micron Technology fell an additional 2.3% in premarket trading, after dropping more than 10% the previous day. Most other semiconductor companies saw modest declines of less than 1%.

In Asia, South Korea's benchmark Kospi index plunged 7.9%, with chip-related shares bearing the brunt of the decline. Memory chipmaker SK Hynix lost 14.6%, and Samsung Electronics tumbled 9.1%. Tokyo's Nikkei 225 lost 2.5%, and shares of chip equipment maker Tokyo Electron shed 7.4%. Taiwan's Taiex declined 0.6%, with chipmaking giant TSMC falling 1.6%.

Despite the recent downturn, surging demand for artificial intelligence has fueled significant gains in many AI and tech stocks in recent months, contributing to substantial increases in markets like South Korea and Japan earlier in the year. However, apprehension over a potential oversupply, driven by massive investments from major technology companies, has begun to cloud investor sentiment.

Economists Megan Fisher and Vicky Redwood of Capital Economics noted in a report that while AI demand may continue to grow, the pace might be slower than anticipated. They suggested that companies and investors could be underestimating the challenges associated with widespread AI adoption, potentially leading to financial returns that fall short of justifying large-scale investments in the near term.

Oil prices also fell, with Brent crude down $1 to $70.57 per barrel and U.S. crude down $1.08 to $67.50 per barrel. These prices are nearing levels seen before the recent conflict began. Hopes for improved crude supply have been bolstered by the gradual reopening of the Strait of Hormuz, a critical global oil transport route, though ship traffic remains limited.

Later Thursday, the U.S. labor market data is scheduled for release, including the weekly unemployment benefits report, which serves as an indicator of layoffs. This report comes a day earlier than usual due to the upcoming July 4 holiday.

In early European trading, Britain's FTSE 100 rose 0.5%, France's CAC 40 advanced 0.8%, and Germany's DAX climbed 0.9%. Hong Kong's Hang Seng closed 0.8% higher, while the Shanghai Composite index fell 2%. Australia's S&P/ASX 200 saw a minor gain of less than 0.1%.