U.S. stocks stumbled this Thursday as a disappointing sales forecast from chipmaker Micron overshadowed early optimism and investors awaited crucial inflation data.

The tech-heavy Nasdaq Composite managed a small gain, but the broader S&P 500 barely budged. This follows a pullback in chipmaker Micron's stock price after its sales forecast, though it met expectations, fell short of hopes for exceptional performance from AI-linked companies. This has cast a shadow over the recent market surge driven by bullishness around artificial intelligence.

Economic Data in Focus

Investors are now shifting focus to the upcoming release of the Personal Consumption Expenditures (PCE) price index on Friday. This data is a key indicator of inflation and will heavily influence the Federal Reserve's decision-making regarding interest rates.

Market Movers:

  • Downward Drag: Micron's stock price plunged over 6% in early trading, dragging down the tech sector. Concerns about a broader tech sell-off similar to last week's resurfaced as Nvidia's stock also dipped.
  • Mixed Earnings Reports: Levi Strauss's share price sank over 15% after missing revenue targets for the second quarter. All eyes will be on Nike's earnings report after the closing bell for insights into consumer spending resilience.
  • Bright Spots: Communication stocks like Netflix and Meta Platforms helped lift the Nasdaq into positive territory.

Key Events to Watch:

  • PCE Inflation Data: The release of the PCE price index on Friday will be the main event for investors. A significant rise in inflation could signal the Fed raising interest rates sooner rather than later.
  • First Presidential Debate: The first debate between President Biden and former President Trump on Thursday night might also influence market sentiment, with inflation potentially being a major talking point.

Overall, the stock market is in a wait-and-see mode, with investors cautious ahead of the crucial inflation data release. The performance of tech stocks, particularly those linked to AI, will also be closely watched in the coming days.