Wall St futures muted amid waning rate cut bets; Nvidia earnings in focus
Investing.com-- Wall Street futures rose from early losses on Sunday evening but remained largely muted on waning bets that the Federal Reserve will cut interest rates in December.
Focus this week is squarely on quarterly earnings from market darling Nvidia for more cues on the artificial intelligence trade and a potential bubble in tech valuations.
S&P 500 Futures rose 0.2% to 6,768.25 points, while Nasdaq 100 Futures rose 0.3% to 25,177.0 points by 18:57 ET (23:57 GMT). Dow Jones Futures were flat at 47,215.0 points.
Wall Street indexes were nursing sharp losses over the past two weeks as investors largely pared expectations that the Fed will cut interest rates in December.
Markets are pricing in a 39.8% chance the Fed will cut rates by 25 basis points during its Dec 10-11 meeting, down sharply from 61.9% a week ago, CME Fedwatch showed.
Market positioning shifted to a hold amid heightened uncertainty over the U.S. economy, especially as a prolonged government shutdown delayed the release of several key economic prints.
While the shutdown ended last week, government officials signaled that inflation and employment figures for October may never be released. Such a scenario leaves the Fed flying blind into its December meeting, leaving markets more geared for a hold.
The minutes of the Fed’s October meeting are also due this week.
The NASDAQ Composite fell nearly 3.6% so far in November, while the S&P 500 lost about 1.6%. The Dow Jones Industrial Average was down the least, at 0.9%, and had also hit a record high last week.
A rout in tech shares was a key driver of weakness in the Nasdaq, as investors questioned sky-high artificial intelligence-fueled valuations.
Market darling NVIDIA Corporation (NASDAQ:NVDA) is set to report its fiscal third quarter earnings on Wednesday, with markets largely holding out for another bumper quarter.
But focus will be squarely on whether Nvidia’s earnings can justify the company’s massive, $5 trillion valuation, especially amid growing doubts over the long-term prospects of AI.
Nvidia was at the heart of a sharp sell-down in tech stocks through late-October and early-November, as investors questioned an AI-fueled spike in tech valuations. Filings over the weekend showed billionaire Peter Thiel had entirely exited his stake in Nvidia, following a similar move by tech conglomerate Softbank Group last week.
Concerns over circular investing in the sector, as Nvidia invested in major customer OpenAI, also drove selling.
Beyond Nvidia, focus this week is also on earnings from major retailers, including Target Corporation (NYSE:TGT) and Walmart Inc (NYSE:WMT) on Wednesday and Thursday, respectively. The two, along with prints from Home Depot Inc (NYSE:HD), Lowe’s Companies Inc (NYSE:LOW), and TJX Companies Inc (NYSE:TJX), are set to provide more cues on the U.S. consumer.
