US stock futures slipped into the red on Tuesday, struggling to build on a broad tech-led rebound 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) ticked 0.1% lower, while those on the S&P 500 (ES=F) edged down roughly 0.2%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) dropped 0.3%, after Monday’s session delivered a strong start to the holiday-shortened trading week.
Stocks are losing 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 on pace for monthly losses as investors reassess sky-high valuations in AI and growth stocks.
On Tuesday, 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. That’s a risk for stocks more broadly, given Nvidia’s performance has been central to this year’s S&P 500 (^GSPC) rally.
Meanwhile, investors are keeping close watch on the Fed. Markets now assign an 80%-plus probability to a quarter-point interest-rate cut in December. Bets on a cut jumped after Fed governor Chris Waller added fuel to hopes by joining a growing chorus of policymakers advocating near-term easing.
Fed comments have been one of the few clues available for gauging rate-cut odds amid the economic data gap caused by the historic US government shutdown. Delayed data releases start to arrive this week, potentially resetting expectations. 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 due on Tuesday and among 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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