Nasdaq 100 futures drop 2% as tech selloff deepens before open

Nasdaq 100 futures slid 2.09% on July 17, extending a tech-driven selloff as geopolitical tensions and rate uncertainty resurfaced after two days of gains.

"With the Fed offering limited forward guidance, each inflation reading is prompting more volatility in rate expectations," said Charlie Ripley, portfolio manager at Allianz Investment Management.

The selloff was concentrated in technology shares, with the Nasdaq 100 futures pointing to a decline of more than 2% at the cash open. The S&P 500 futures fell 1%, while the Dow Jones Industrial Average futures dropped 0.63%, suggesting a broad-based retreat. The Cboe Volatility Index, which measures implied equity volatility, was expected to rise sharply from its July 15 close.

The move erased gains from earlier in the week, when the S&P 500 closed at 7,566.51 on July 15 after the June Producer Price Index unexpectedly fell 0.3%, following a softer-than-expected consumer inflation reading. Traders now face a confluence of risks: escalating US military strikes against Iran that pushed WTI crude above $80 a barrel, Fed Chair Kevin Warsh's hawkish congressional testimony reiterating that one data point was not enough to declare victory over inflation, and a busy earnings calendar featuring results from Netflix and UnitedHealth.

The 10-year Treasury yield was at 4.55% on July 15, down from 4.61% before the PPI reading, while the US dollar index traded at 100.52. Traders had priced in about a 12% chance of a quarter-point rate increase at the Fed's next meeting, down from nearly 41% before the CPI report, according to CME's FedWatch tool. The futures selloff suggests those expectations may be reassessed as the cash market opens.

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