The major U.S. index futures are currently pointing to a modestly lower open on Thursday, with stocks likely to see further downside following the sell-off seen in the previous session.

After ending Tuesday’s choppy trading session modestly lower, stocks showed a more substantial move to the downside during trading on Wednesday. The tech-heavy Nasdaq showed a particularly steep drop on the day, tumbling to its lowest closing level in over a month.

The major averages saw further downside late in the session, closing near their worst levels of the day. The Nasdaq plunged 654.94 points or 3.6 percent to 17,342.41, the S&P 500 dove 128.61 points or 2.3 percent to 5,427.13 and the Dow slumped 504.22 points or 1.3 percent to 39,853.87.

The sell-off on Wall Street came amid a negative reaction to corporate earnings news from companies like Tesla (NASDAQ:TSLA) and Alphabet (NASDAQ:GOOGL).

Shares of Tesla plummeted by 12.3 percent after the electric vehicle maker reported weaker than expected second quarter earnings.

Google parent Alphabet also plunged 5.0 percent after reporting second quarter earnings that beat analyst estimates but missing expectations for YouTube advertising revenue.

Shares of Meta Platforms (NASDAQ:META) also tumbled by 5.6 percent after the Facebook parent announced a free version of its Llama artificial intelligence model.

On the other hand, telecom giant AT&T (NYSE:T) jumped by 5.2 percent after reporting second quarter earnings in line with estimates and stronger than expected phone subscriber growth.

In U.S. economic news, the Commerce Department released a report unexpectedly showing a continued decrease by new home sales in the U.S. in the month of June.

The report said new home sales fell by 0.6 percent to an annual rate of 617,000 in June after plummeting by 14.9 percent to a revised rate of 621,000 in May.

Economists had expected new home sales to surge by 3.4 percent to a rate of 640,000 from the 619,000 originally reported for the previous month.

With the unexpected decline, new home sales slumped to their lowest level since hitting an annual rate of 611,000 in November 2023.

Semiconductor stocks showed a substantial move to the downside on the day, with the Philadelphia Semiconductor Index plunging by 5.4 percent to its lowest closing level in two months.

Software, networking and computer hardware stocks also saw significant weakness, contributing to the steep drop by the Nasdaq.

Considerable weakness was also visible among airline stocks, as reflected by the 3.4 percent nosedive by the NYSE Arca Airline Index.

Housing, oil service and retail stocks also showed notable moves to the downside, while utility stocks bucked the downtrend, driving the Dow Jones Utility Average up by 1.7 percent.