U.S. Stock Index Futures Muted Amid Tech Sector Sell-Off
On Monday evening, U.S. stock index futures showed minimal movement after a mixed session on Wall Street. This session was marked by significant selling in technology shares, particularly Nvidia and its peers. The upcoming inflation data expected later in the week remained a key focus for investors, as it is anticipated to influence expectations regarding potential interest rate cuts this year.
At 7:08 PM ET (11:08 PM GMT), S&P 500 Futures were flat at 5,517.25 points. Nasdaq 100 Futures saw a slight increase, trading at 19,763.75 points, while Dow Jones Futures experienced a mild rise to 38,868.0 points.
Tech Sector Reeling from Losses
The Wall Street indexes experienced significant losses, especially in NVIDIA Corporation (NASDAQ: NVDA) and other leading chipmaking stocks. Investors took profits after a substantial rally in the sector over recent months. Nvidia saw a 6.7% drop, marking its third consecutive session of declines after briefly becoming the most valuable company on Wall Street last week. The stock continued to fall by another 1.1% in aftermarket trading. Despite this downturn, Nvidia has surged about 138% year-to-date, with analysts maintaining a positive outlook due to the massive demand driven by artificial intelligence.
Other chipmaking stocks, including Broadcom Inc (NASDAQ: AVGO), U.S. shares of Taiwan Semiconductor Manufacturing (NYSE: TSM), and Qualcomm Incorporated (NASDAQ: QCOM), stabilized in aftermarket trading following Monday’s downturn. Memory chip maker Micron Technology Inc (NASDAQ: MU) was also mildly lower before its quarterly earnings report due on Wednesday.
Mixed Close on Wall Street
The losses in chipmaking stocks led to a mixed close on Wall Street. The S&P 500 fell 0.3% to 5,447.87 points, while the NASDAQ Composite dropped 1.1% to 17,500.60 points. However, the Dow Jones Industrial Average outperformed, rising 0.7% to a one-month high of 39,411.21 points, driven by strength in sectors outside of technology.
Investors appeared to be rotating out of technology stocks and into more economically sensitive sectors in anticipation of the key inflation data set to be released later in the week. This data is expected to offer more cues on the future path of interest rates.
Focus on PCE Inflation Data
This week’s primary focus is the PCE (Personal Consumption Expenditures) price index data, the Federal Reserve’s preferred inflation gauge, due on Friday. Expectations are for the data to show a mild cooling in inflation, although it is anticipated to remain well above the Fed’s 2% annual target range. Persistent inflation is expected to delay any potential plans by the Fed to cut interest rates, a scenario that could negatively impact stock markets. However, the prospect of eventual rate cuts has been a significant driver of the recent surge in Wall Street.
Aftermarket Movers: Birkenstock and SolarEdge
Among major aftermarket movers, footwear maker Birkenstock Holding Ltd (NYSE: BIRK) slid 5% after announcing that a top shareholder plans to sell 14 million shares in a public offering. SolarEdge Technologies Inc (NASDAQ: SEDG) fell 13.4% following its announcement to offer $300 million in new debt.
Conclusion
As the market awaits the critical PCE inflation data, investors are closely monitoring how it will influence the Federal Reserve’s interest rate policy. The tech sector’s recent volatility, especially in high-flying stocks like Nvidia, underscores the market’s sensitivity to profit-taking and broader economic indicators. The upcoming inflation reading and its implications for future rate cuts will likely play a crucial role in shaping market movements in the coming days.