Nasdaq, S&P 500 Futures Slip As Traders Brace For Key Data — Nvidia, AMD Pullback Amid AI Skepticism

• The market witnessed a tech-led rally on Monday after Federal Reserve officials raised hopes of a December rate cut.
• A raft of economic data, including delayed government releases, could introduce volatility in Tuesday’s session.
• AI discussions would continue as sceptics kept ranting about a bubble forming.

U.S. stocks could pause on Tuesday as traders grow cautious after the market's two-session recovery. Sentiment toward major artificial intelligence plays has turned mixed after a report, citing sources, stated that Alphabet, Inc. (GOOGL) (GOOG) is in talks to sell its Tensor Processing Unit (TPU) AI chips to Meta Platforms, Inc. (META) and other companies.\

Shares of Nvidia and AMD, major AI chip plays, fell sharply in overnight trading, while Alphabet and its partner Broadcom (AVGO) have gained ground. Nvidia could also come under pressure, as Big Short fame investor Michael Burry asserted that his analysis of the company was spot-on. Investors are likely to scrutinize earnings reports from Dell (DELL) and HP, Inc. (HPQ), due after the market close, to gauge the health of AI spending.=

A raft of economic data, including delayed government releases, could introduce volatility in the market.

How Futures Are Trading

As of 4:15 a.m. ET on Tuesday, the Nasdaq 100 futures slid 0.21%, and the S&P 500, Dow and Russell 2000 futures also fell modestly, although by a lesser magnitude.

On Stocktwits, retail sentiment toward the SPDR S&P 500 ETF (SPY), an exchange-traded fund that tracks the S&P 500 Index, remained ‘bearish’ as of early Tuesday. The Invesco QQQ Trust (QQQ) ETF, which tracks the Nasdaq 100 Index, attracted ‘bearish’ sentiment, a deterioration from the ‘neutral’ mood a day before. The message volume on the SPY and QQQ ETF streams remained at ‘high’ levels.

Commenting on the QQQ stream, a user wondered about the “crazy” shift between “extreme fear and extreme greed.”

Another user worried about the dominant impact of AI on the U.S. economy. “All the US does anymore is AI.  Any chinks in that armor...and its over,” they said.

How Markets Fared Monday

The market witnessed a tech-led rally on Monday after Federal Reserve officials raised hopes of a December rate cut. Fed Governor Christopher Waller, as well as San Francisco Fed’s Mary Daly, said in separate public appearances that they supported a rate cut. 

The QQQ and SPY rallied 2.56% and 1.47%, respectively, with communication services, IT and consumer discretionary stocks leading from the front. Alphabet stock hit a fresh high amid rising optimism toward the stock. The SPDR Dow Jones Industrial Average ETF Trust (DIA) and the iShares Russell 2000 ETF (IWM) ended up 0.40% and 1.83%, respectively.

Key Catalysts To Watch Out For

The Bureau of Labor Statistics (BLS) is scheduled to release its September producer price inflation report at 8:30 a.m. ET. The September retail sales report is also due around the same time. S&P and the Federal Housing Finance Agency (FHFA) will release their respective house price reports at 9 a.m. ET.

Also on tap are the Commerce Department’s business inventories for September, the Conference Board’s November consumer confidence report, and the National Association of Realtors’ pending home sales report for October. 

Aside from Dell and HP, other notable names reporting earnings on Tuesday are Abercrombie Fitch (ANF), Alibaba (BABA), Analog Devices (ADI), Burlington Stores (BURL), Dick’s Sporting Goods (SKS), J.M. Smucker (SJM), Kohl’s (KSS), Nio (NIO), Ambarella (AMBA), Autodesk (ADSK), Guess, Inc. (GES), NetApp (NTAP), Nutanix (NTNX), PagerDuty (PD), Petco Health and Wellness (PD), Urban Outfitters (URBN), Workday (WDAY) and Zscaler (ZS).

How Other Markets Fared

Crude oil and gold futures fell sharply early Tuesday, giving back gains from the previous session. The 10-year Treasury note remained steady above the 4% ahead of key economic data. The U.S. dollar was also little changed against major counterparts.

Most major Asian markets ended higher for the day, although the underlying mood remained cautious as traders braced for key U.S. economic data.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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