Wall Street set to fall as megacap chip, tech stocks tumble
Chip stocks slump on China trade worries, tech rout
J&J flat after cutting annual profit forecast
Lilly down as rival Roche reports early data for obesity pill
Spirit Airlines shares slip after lowered Q2 forecast
Futures down: Dow 0.28%, S&P 500 0.96%, Nasdaq 1.46%
Updated at 8:40 a.m. Et/1240 GMT
By Lisa Pauline Mattackal and Ankika Biswas
July 17 (Reuters) - Indexes were set to open lower on Wednesday, as declines in major chip and tech stocks led broad-based market losses amid a slew of corporate results and the prospect of tougher U.S. trade restrictions being imposed on Chinese chips.
A report that theBiden Administration was considering severetrade restrictions as part of a chip clampdown against China weighed on semiconductor stocks in premarket trading.
AI-chip favorite Nvidia NVDA.O tumbled3.8%, while ASML's U.S.-listing ASML.O lost8.2%.
In other moves, U.S.-listed shares of Taiwan Semiconductor Manufacturing TSM.N shed6.0% after Republican presidential candidate Donald Trump said Taiwan should pay the U.S. for its defense.
Marvell Technology MRVL.O, Broadcom AVGO.O, Qualcomm QCOM.O, Micron Technology MU.O, Advanced Micro Devices AMD.O and Arm Holdings ARM.O were also down between 3% and 4.7%.
All the so-called "Magnificent Seven" megacap stocks slumped, with Apple AAPL.O, Microsoft MSFT.O Meta Platforms META.O and Tesla TSLA.O down between 1% and 2.1%.
The possibility of a fresh crackdown on China trade could be the negative trigger investors were waiting for to start booking profits in tech stocks, according to Ahmed Azzar, financial market analyst at Equiti Group.
Futures tracking the Russell 2000 RTYcv1 fell0.6% after the small-cap index .RUT rallied nearly 12% over the last five sessions.
Signaling growing investor unease,Wall Street's "fear gauge" .VIX was trading at its highest level in six weeks.
The Dow Jones Industrial Average .DJI and the S&P 500 .SPX had closed at all-time highs on Tuesday.
After a blistering rally in tech companies since the last leg of 2023, investors have begun moving out of expensive megacaps to underperforming areas of the market.
"I'm still optimistic that the market is not as expensive as maybe it's feared, but that's because we're so overbought that some near-term selling pressure is likely to develop," said Robert Pavlik, senior portfolio manager at Dakota Wealth, adding that he had also taken some profits in tech.
Firmer bets on a Fed rate cut in September as well as rising expectations that former President Donald Trump will be back in the White House in November following theattempt on his life havehelped lift stocks in the last few sessions.
Investors will focus on comments from Fed officials Thomas Barkin and Christopher Waller later in the day for clues on how policymakers have assessed recent economic data.
The New York Fed's John Williams said in an interview that the central bank was "getting closer" to a point where it could start cutting interest rates.
On the earnings front, J&J JNJ.N was flat, paring losses after the drug and devices maker lowered itsannual earnings forecast.
Industrial production data for June is also due before markets open.
At 8:40 a.m. ET, Dow e-minis 1YMcv1 were down 116 points, or 0.28%, S&P 500 e-minis EScv1 were down 55 points, or 0.96%, and Nasdaq 100 e-minis NQcv1 were down 300.75 points, or 1.46%.
Among others, U.S. drugmaker Eli Lilly LLY.N fell 3.4% after Swiss rival Roche's ROG.S promising early-stage data from anexperimental obesity pill.
Spirit Airlines SAVE.N slumped 4%after lowering its second-quarter revenue outlook, citing lower-than-expected non-ticket revenue.
Northern Trust NTRS.O rose 2.1% after the asset and wealth manager reported a jump in second-quarter profit on higher fees and an accounting gain.
Reporting by Lisa Mattackal and Ankika Biswas in Bengaluru; Editing by Pooja Desai
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