Wall Street Faces Turbulence as Tech Earnings Disappoint

(Bloomberg) — Stock futures indicated a significantly weaker opening for Wall Street, as rising global bond yields, escalating trade-war fears, and disappointing tech earnings unsettled markets. Contracts on the Nasdaq 100 fell by 1.2%, while those on the S&P 500 dropped by 1%. Marvell Technology Inc. saw its shares plummet by 15% in premarket trading after the chipmaker’s results and revenue forecast failed to meet investors’ high expectations.

Tech Sector Struggles Amidst Market Uncertainty

In addition to Marvell, CrowdStrike Holding Inc. also faced a downturn after the cybersecurity company issued a worse-than-expected earnings outlook. The tech sector has been under pressure, particularly after Alibaba Group Holding Ltd. introduced its latest DeepSeek rival at a significantly lower price point, intensifying competition in the chip market.

Global Bond Yields and Trade War Concerns

Rabobank strategist Matthew Cairns noted that markets are primarily focused on the ongoing global bond rout and the potential economic fallout from the escalating trade war. President Donald Trump has imposed tariffs on imports from Mexico and Canada, although he has granted automakers a one-month exemption. “The notion of starting a trade war, which will result in retaliation from the countries that are targeted, means there will be additional pressure on the US,” Cairns explained. “This is not a favorable scenario for equities and earnings growth, as US households are likely to feel the pinch.”

European Markets React to Rising Bond Yields

Europe’s Stoxx 600 index surrendered early gains, slipping by 0.5% in response to sharply higher bond yields across the continent. This reaction followed Germany’s announcement of plans to deploy hundreds of billions of euros in additional spending. Germany’s spending initiative led to Bunds experiencing their worst session since 1990, with the selloff extending into Thursday, pushing yields up by another 10 basis points.

Impact on Global Markets

The bond selloff has reverberated through markets across the euro area and beyond, with Japanese 10-year borrowing costs reaching their highest levels in over a decade and Treasury yields increasing by three basis points. Bond investors are now closely monitoring the upcoming European Central Bank (ECB) meeting, which is anticipated to deliver a 25 basis-point interest rate cut and may provide insights into how rate-setters will respond to the additional spending plan.

“This is ultimately a reassessment of the reality that Europe needs to find some financing,” Cairns commented regarding the bond selloff. “Some further repricing is likely throughout this morning, then the ECB will step in to attempt to stabilize market sentiment.”

Challenges for Aerospace Industry

In related news, GKN Aerospace owner Melrose has forecasted 2025 revenue below most analysts’ expectations, causing its shares to drop sharply on Thursday. The aerospace sector continues to grapple with global trade uncertainties and industry-wide supply chain challenges. Production delays and supply chain issues at major plane manufacturers Boeing and Airbus have adversely affected the aerospace industry. However, Melrose has seen growth in demand for after-market services as airlines extend the use of older aircraft.

Future Outlook for Melrose

“We are well positioned for further progress in 2025, including the expected delivery of substantial free cash flow, despite ongoing industry challenges,” stated CEO Peter Dilnot. “If they land as they do today and they stick, in the context of a group that’s going to generate 700 million pounds of operating profit, it’s pretty small and it really impacts the flow of material between Mexico, where we have quite a large operating base, and into the US,” he added.

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