US stock index futures were muted on Wednesday after a sharp rotation out of technology stocks dragged major benchmarks to a losing session, while investors assessed earnings updates and prepared for key labor-market data later in the day.
Futures tied to the S&P 500 rose 0.26% on Wednesday morning, while Dow Jones Industrial Average futures added 173 points, or 0.35%.
Nasdaq 100 futures were little changed, reflecting continued caution toward growth and technology names after recent losses.
Tech selloff
The previous session saw a broad selloff in riskier growth stocks, with investors rotating toward more cyclical names.
The S&P 500 fell about 0.8%, while the tech-heavy Nasdaq 100 declined 1.4%.
The Dow shed nearly 167 points, or 0.3%, after touching a fresh intraday record earlier in the day.
Technology and software stocks bore the brunt of the selling pressure.
Shares of several major software firms slid sharply following news that Anthropic had launched a new legal services tool, stoking fears that rapid AI advances could disrupt established software business models.
ServiceNow and Salesforce each fell nearly 7%, while private credit firms with exposure to the software ecosystem, including Blue Owl and TPG, also declined.
The software and services index has now fallen for a fifth straight session, down more than 12% over that stretch, marking its steepest run of losses since March 2020.
Losses moderated somewhat in premarket trading, but sentiment remained fragile amid persistent concerns over competition and pricing power in an AI-driven environment.
Earnings drive stock-specific moves
Corporate earnings and guidance added to volatility in premarket trading.
Chipotle Mexican Grill shares dropped nearly 6% after the restaurant chain reported declining customer traffic for a fourth consecutive quarter and projected flat same-store sales growth for 2026.
The company also said it expects to raise menu prices this year, while margins remain under pressure as consumers cut back on dining out.
Advanced Micro Devices slid as much as 9% after issuing a first-quarter forecast that disappointed some analysts.
The stock fell after forecasting a slight dip in quarterly revenue, reigniting doubts about its ability to compete in the fast-growing artificial intelligence chip market.
Elsewhere, Super Micro Computer jumped more than 10% after raising its annual revenue outlook on sustained demand for AI-optimized servers, offering some support to the broader technology sector.
Alphabet and Amazon edged higher ahead of their earnings reports later this week, as investors look for evidence that heavy capital spending on AI is translating into durable returns.
Alphabet will report its earnings after market close on Wednesday.
Labor data and policy in focus
Investors are also turning their attention to labor-market data, with the ADP report on private payroll growth for January due Wednesday morning.
Economists surveyed by Dow Jones expect an increase of 45,000 jobs, compared with 41,000 in December.
The report is being closely watched after a partial government shutdown delayed the release of several official labor indicators, including nonfarm payrolls and JOLTS data.
Small and mid-cap stocks have shown relative resilience amid the rotation.
The Russell 2000 and the S&P 400 ended higher in the previous session and were on track to outperform the S&P 500 on a weekly basis, as investors searched for value outside crowded technology trades.
Market volatility remained elevated, with the CBOE Volatility Index hovering at 17.61 after touching 18 in the previous session.
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