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Chip stocks fall on China trade worries, tech rout

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J&J down after cutting annual profit forecast

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Lilly slumps as rival Roche reports early data for obesity

pill

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Spirit Airlines ( SAVE ) shares slip after lowered Q2 forecast

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Futures down: Dow 0.21%, S&P 500 0.81%, Nasdaq 1.28%

(Updated at 7:02 a.m. ET/1102 GMT)

By Lisa Pauline Mattackal and Ankika Biswas

July 17 (Reuters) -

Nasdaq futures shed over 1% on Wednesday, leading losses

among the main U.S. indexes as megacap chip and tech stocks

tumbled in a broad market decline amid a deluge of corporate

results and the prospect of tougher trade restrictions on

Chinese chips.

Megacaps such as Apple ( AAPL ), Microsoft ( MSFT ) and Meta

Platforms lost between 1% and 2% before the opening

bell.

Shares of semiconductor companies also fell, with AI-chip

favorite Nvidia ( NVDA ) sliding 3.5% and ASML's U.S.-listing

dropping 7.5% after a report the Biden Administration

was considering severe trade restrictions as part of a crackdown

on Chinese chips.

Elsewhere, U.S.-listed shares of Taiwan Semiconductor

Manufacturing shed 4.3% after Republican presidential

candidate Donald Trump said Taiwan should pay the U.S. for its

defense.

Marvell Technology ( MRVL ), Broadcom ( AVGO ), Qualcomm ( QCOM )

, Micron Technology ( MU ), Advanced Micro Devices ( AMD )

and Arm Holdings were also down between 2.7% and

4%.

Wall Street's "fear gauge" briefly touched a more

than six-week high in early trading, signaling investor unease.

Trade Nation senior market analyst David Morrison cited

profit-taking among the likely causes for Wednesday's dip in

futures.

The Dow Jones Industrial Average and the S&P 500

had closed at all-time highs on Tuesday.

After a blistering rally in tech companies since the

last leg of 2023, investors are now moving to hitherto

underperforming areas of the market on growing bets that the

Federal Reserve is nearing the start of interest-rate cuts.

Futures tracking the Russell 2000 fell 0.3% after

the small-cap index rallied nearly 12% over the last five

sessions.

"It could be the rally has been running on fumes recently...

what we're seeing now is a generalized pullback, which is

totally consistent with consolidation and profit-taking after

record highs in the major indices," Morrison said.

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 the attempt on his life

have helped lift stocks over the past 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 inflation, employment and

retail sales data.

On the earnings front, J&J slipped 0.4%, but pared

losses after the drug and device maker lowered its annual

earnings outlook.

In the day's economic data, housing starts and industrial

production data for June are due before market open.

At 7:02 a.m. ET, Dow e-minis were down 86 points,

or 0.21%, S&P 500 e-minis were down 46.5 points, or

0.81%, and Nasdaq 100 e-minis were down 264 points, or

1.28%.

Among others, U.S. drugmaker Eli Lilly ( LLY ) fell 2.8%

after Swiss rival Roche's promising early-stage data

from an experimental obesity pill, which it acquired as part of

its buyout of Carmot Therapeutics.

Trucking firm JB Hunt Transport Services fell 3%

following a 24% drop in second-quarter profit.

Spirit Airlines ( SAVE ) slumped 6.6% after lowering its

second-quarter revenue outlook, citing lower-than-expected

non-ticket revenue.