(Reuters) – U.S. stock index futures dropped on Thursday, as Micron Technology slumped after an unimpressive current-quarter forecast and dragged down other chip stocks, while caution ahead of economic data and a presidential debate also dented sentiment.

The memory chipmaker’s shares lost 5.5% premarket after fourth-quarter revenue forecast came largely along expectations and disappointed investors upbeat about its performance in the AI boom. Optimism around AI-driven demand had lifted the stock 14% this month ahead of earnings.

Other semiconductor stocks including Nvidia, Arm Holdings, Qualcomm and Advanced Micro Devices were down between 0.8% and 1.1%.

With a handful of expensive heavily weighted stocks supporting Wall Street’s ascent since the last leg of 2023, market participants have highlighted concerns over the rally’s sustainability and have called out for the need to diversify portfolios to hedge against possible sharp losses.

Wall Street’s three major indexes eked out modest gains in Wednesday’s choppy trading, with Amazon.com hitting $2 trillion in market value for the first time. The retail giant’s shares edged lower on Thursday in lackluster trading for megacap tech stocks.

Focus now shifts to a slate of economic data including durable goods for May, weekly jobless claims and first-quarter PCE and GDP figures before markets open, just a day ahead of the Federal Reserve’s preferred inflation gauge- the monthly personal consumption expenditures (PCE) price index.

Investors have largely stuck to their view of around two rate cuts this year, as per LSEG’s FedWatch data, even though the U.S. central bank has projected only one. Chances of an at least 25-basis-point rate cut in September stand at 56.4%.

Further, President Joe Biden and former President Donald Trump are set to face each other in the first debate during the day, ahead of their rematch this November.

At 5:27 a.m. ET, Dow e-minis were down 73 points, or 0.18%, S&P 500 e-minis were down 8.75 points, or 0.16%, and Nasdaq 100 e-minis were down 39.5 points, or 0.2%.

Further on the earnings front, Walgreens Boots Alliance will detail its results before the market’s open, with its shares up 2.1% in early trade, while Nike is due after the closing bell.

Denim maker Levi Strauss slumped 15% after falling short of expectations for second-quarter revenue, while U.S.-listed shares of Canada’s BlackBerry rose 7.2% after beating first-quarter revenue estimates.

International Paper dropped 14.8% after the world’s largest pulp manufacturer, Brazil’s Suzano, terminated talks to buy the U.S.-based firm.

(Reporting by Ankika Biswas in Bengaluru; Editing by Maju Samuel)