US stock futures slipped into the red on Tuesday, struggling to build on a broad tech-led rebound that was fueled by growing optimism that the Federal Reserve will deliver a rate cut next month.
Futures linked to the Dow Jones Industrial Average (YM=F) and to the S&P 500 (ES=F) both hovered below the flatline. Contracts on the tech-heavy Nasdaq 100 (NQ=F) ticked down 0.1%, after Monday’s session delivered a strong start to the holiday-shortened trading week.
Stocks are trying to hold onto the momentum that saw the Nasdaq Composite (^IXIC) surge 2.7% as tech megacaps snapped back from a bruising stretch. But even with Monday’s bounce, the major US indexes are still on pace for monthly losses as investors reassess sky-high valuations in AI and growth stocks.
Shares of Nvidia (NVDA) came under pressure after The Information reported that Meta (META) is in talks to spend billions on Google’s AI chips. The Alphabet-owned company’s (GOOG, GOOGL) growing challenge to Nvidia’s leadership in AI datacenters pulled the stock 2% lower in premarket. That is weighing in turn on stocks more broadly, given Nvidia’s performance has been central to the S&P 500’s (^GSPC) rally this year.
Meanwhile, investors are keeping close watch on the Fed. Markets now assign an 80%-plus probability to a quarter-point rate cut in December. Rate-cut expectations jumped after New York Fed President John Williams signaled last week that cuts could come in the “near term,” and Fed governor Chris Waller added fuel to that fire on Monday.
Delayed economic data releases start to see the light of day this week. On Tuesday, markets get September updates on producer prices and retail sales, plus a November reading of consumer confidence, among other data.
On the earnings front, Alibaba (BABA), and retailers Kohl’s (KSS) and Best Buy (BBY) are the highlights in the holiday-shortened week. US markets will be closed Thursday for Thanksgiving and will operate on a reduced schedule on Friday, shutting at 1 p.m. ET.
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