Broadcom shares dropped more than 12% in premarket trading on Thursday after the chipmaker’s third-quarter revenue guidance failed to meet investor expectations. While the outlook narrowly beat analyst forecasts, markets had been hoping for a bigger beat.
“This was a classic case of very high expectations meeting a market that wanted perfection,” said Matt Britzman, analyst at Hargreaves Lansdown. “Investors are punishing anything that falls short of exactly what they wanted to hear.”
The disappointment hit the wider tech sector hard. Micron and Sandisk also slumped in early trading. Nasdaq 100 futures fell around 1.1%, while S&P 500 futures dropped 0.3%.
The major indexes had already fallen on Wednesday, snapping a five-session winning streak in which all three gauges had set record closing highs.
Not all indexes moved lower. Dow futures climbed around 234 points, or 0.5%, early Thursday. The gain was driven partly by falling oil prices, which benefited several of the index’s blue-chip members.
Oil fell after Israel and Lebanon agreed to renew their ceasefire, on the condition that Iran-backed Hezbollah stops its attacks. Brent crude slipped 0.8% to $97.03 a barrel. West Texas Intermediate dropped 0.7% to $95.32.
Geopolitical tensions also remain in focus. On Wednesday evening, the House of Representatives voted to end the war with Iran, a rebuke to President Trump. The move came after the most serious escalation between the US and Iran since the April ceasefire.
The US dollar edged 0.1% lower against a basket of currencies. The yield on the 10-year Treasury note was down one basis point at 4.49%.
Bitcoin fell 4.8% over 24 hours to $63,857. The drop reflected the broader risk-off mood in markets following the Broadcom miss and ongoing geopolitical uncertainty.
SpaceX confirmed in a new filing it plans a $75 billion IPO, which would be a record-breaking listing if it proceeds.
Wall Street is also watching the labor market ahead of Friday’s May jobs report. Weekly jobless claims and layoff data from Challenger, Gray & Christmas are both due Thursday.
Earnings continue with Ciena, lululemon, and DocuSign set to report results later in the day.
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