US STOCKS-S&P 500, Nasdaq futures muted as valuation concerns grip tech sector

By Shashwat Chauhan and Pranav Kashyap

Nov 21 (Reuters) - Futures for the Nasdaq and the S&P 500 were subdued on Friday, with tech heavyweights still reeling from the prior session's rout as worries over sky-high valuations and uncertainty over U.S. rate cuts dented sentiment.

Nvidia NVDA.O dropped 2% in premarket trading after a volatile session on Thursday when the shares swung as much as 5% higher before closing 3.2% down.

The world's most valuable company surpassed third-quarter revenue expectations and forecast fourth-quarter sales above analysts' estimate late on Wednesday, while its CEO dismissed concerns about an AI bubble.

"Relief around Nvidia's results didn't last long as investors couldn't shake their fears that the AI boom might have gotten ahead of itself," said Dan Coatsworth, head of markets at AJ Bell.

All three main indexes were on track for their worst weekly drop since March.

The Nasdaq .IXIC has retreated sharply from its October peak and is poised for a steep decline in November amid skepticism over tech monetization prospects, circular spending within the sector and rising debt issuance.

Global brokerages were divided over the likelihood of a December rate cut after Thursday's release of the long-delayed September jobs report, which marks the last employment reading before the Federal Reserve's verdict next month.

The Bureau of Labor Statistics plans to skip its October update and instead combine October and November nonfarm payroll data in a single report due mid-December.

Traders currently see nearly a 37% chance of a December rate cut, according to the CME FedWatch Tool.

At 06:51 a.m., Dow E-minis YMcv1 were up 120 points, or 0.26%, S&P 500 E-minis EScv1 were down 8 points, or 0.12%, and Nasdaq 100 E-minis NQcv1 were down 89 points, or 0.37%.

Other chip-related stocks such as Advanced Micro Devices AMD.O fell 1.3%, while Broadcom AVGO.O was down 1%.

Megacap and growth stocks also fell, with Meta Platforms META.O down 0.7% and Microsoft MSFT.O losing 0.4%.

Consumer discretionary .SPLRCD and information technology .SPLRCT sectors are set for a more than 4% drop this week.

"That's a sign of a frothy market where investors sell into strength, not chasing it," said Elias Haddad, global head of markets strategy at Brown Brothers Harriman.

Investors will tune in to the public remarks from at least five Fed officials throughout the day, while attention also turns to November business activity and consumer sentiment data, due shortly after the markets open.

Among other stocks, Gap GAP.N gained 4.4% after the apparel maker beat third-quarter comparable sales and profit estimates.

Cryptocurrency and blockchain-related stocks dropped as bitcoin BTC= and ether ETH= hit multi-month lows.

Exchange operator Coinbase Global COIN.O fell 2.4% and Strategy MSTR.O, the largest corporate holder of bitcoin, slid 4.3%.