U.S. stock futures were mixed on Monday as investors shifted their attention to key corporate results, particularly from AI-chip heavyweight Nvidia (NASDAQ: NVDA), after a sharp decline on Wall Street the previous week.
Rising expectations that the Federal Reserve will slow its pace of rate cuts and uncertainty over the impact of U.S. President-elect Donald Trump’s cabinet appointments saw indexes slump on Friday.
The S&P 500 and the Nasdaq fell back from record highs, seeing their worst weekly losses in over two months.
Results from Nvidia, which reports third-quarter earnings on Wednesday, will be crucial as investors assess whether the optimism around AI, responsible for much of the markets’ tech-driven rally this year, can be sustained. Its shares fell 2.1% in premarket trading after a report said its new AI chips were overheating in servers.
Nvidia’s revenue is forecast to jump more than 80% to $33 billion, according to estimates compiled by LSEG, and the company is expected to post a net income of $18.4 billion.
“Given that its (Nvidia’s) more recent earnings ‘beats’ have been dwindling in size, this report will have to beat estimates more than comfortably, especially with broader valuations looking rather lofty and bond yields turning back higher after a brief respite,” said Marc Ostwald, chief economist and global strategist at ADM Investor Services International.
Most other megacaps edged higher, with Nasdaq 100 futures gaining ground after the index fell for five consecutive sessions. Alphabet (NASDAQ: GOOG) rose 0.3%, Amazon.com (NASDAQ: AMZN) was up 0.6% and Tesla (NASDAQ: TSLA) soared 7.3%.
Earnings from major retailers including Walmart (NYSE: WMT), Lowe’s Companies (NYSE: LOW), and Target (NYSE: TGT) this week will also be scrutinized to gauge the strength of the U.S. consumer, with the key holiday shopping season set to begin.
Dow E-minis were down 137 points or 0.32%, S&P 500 E-minis were up 3.5 points, or 0.06% and Nasdaq 100 E-minis were up 82.25 points, or 0.40%.
Stock indexes have lost some of the sharp gains made in the wake of Trump’s decisive presidential election win, as optimism over the Republican’s potentially pro-business stance has given way to focus on the inflationary impact of his policies and the outlook for the U.S. Federal Reserve’s interest-rate path.
Chicago Fed President Austan Goolsbee is scheduled to speak on the day, the first of several central bank officials slated this week. Their comments will be followed closely after Chair Jerome Powell said the Fed was in no hurry to cut rates.
Traders are pricing in a 38.1% chance the Fed will keep rates on hold in December, according to the CME FedWatch.
Still, Wall Street remains fairly well-placed as 2024 winds down. The benchmark index has gained nearly 3% in November and 23% year-to-date as solid economic data, the presidential election, and broadly upbeat earnings propelled equities to record highs.
CVS Health’s (NYSE: CVS) shares gained 3.1% after the health insurer said it would add four new members to its board in an agreement with Glenview Capital Management.
Shares of Moderna (NASDAQ: MRNA) advanced 2.4% after HSBC upgraded the vaccine maker’s stock to “buy” from “hold”.
