Thu. Jul 25th, 2024

By Ankika Biswas and Lisa Pauline Mattackal

(Reuters) -Nasdaq futures outperformed peers on Tuesday as Nvidia and other AI-linked stocks rose after a bruising selloff, while investors awaited further cues on the monetary policy path based on remarks by U.S. Federal Reserve officials and fresh economic data this week.

AI chip firm Nvidia advanced 2.5% premarket after losing nearly 13% and $430 billion in market value in the last three trading days.

Peers Micron Technology, Broadcom and Qualcomm were up more than 1% each, while AI-optimized server maker Super Micro Computer rose 1.7%.

The tech-heavy Nasdaq slumped more than 1% on Monday in its steepest one-day fall since late April, as investors pulled out of the AI-linked stocks in favor of other sectors.

At the start of the week, investors bought into sectors including utilities and energy that have underperformed technology and tech-adjacent stocks this year, causing the Dow to hit a one-month high on Monday. Futures tracking the blue-chip index edged lower on Tuesday.

Technology and other growth stocks have driven the S&P 500 and the Nasdaq to record highs this year, but the value-focused Dow continues to significantly lag the other indexes, causing some to raise concerns over the sustainability of equity strength.

“The question investors now need to ask is if the sell-off has gone far enough since the stock (Nvidia) is in correction territory, or if this is a structural shift lower, that will weigh on the major U.S. indices and allow other regions and indices to play catch up,” said Kathleen Brooks, research director at XTB.

Data on the personal consumption expenditures (PCE) price index – the Fed’s preferred inflation gauge – on Friday is at the top of the watch list, while investors will also keep an eye out for consumer confidence data during the day.

Fed Governor Michelle Bowman said inflation was still elevated, and a steady policy rate was needed “for some time.” Fellow FOMC voting member Lisa Cook is also set to speak on Tuesday.

Market participants see 61% odds of a 25-basis point interest rate cut in September, and are eyeing around two cuts by the end of the year, according to LSEG’s FedWatch data.

A slew of quarterly corporate earnings are also scheduled for the day, with cruise operator Carnival Corp due before market open and parcel delivery giant FedEx after the bell.

At 7:21 a.m. ET, Dow e-minis were down 31 points, or 0.08%, S&P 500 e-minis were up 11.75 points, or 0.21%, and Nasdaq 100 e-minis were up 96.25 points, or 0.49%.

Among other major premarket movers, Spirit AeroSystems dropped 3.4%. A report showed Boeing has offered to acquire the airplane fuselage maker in a deal funded mostly by stock that values its key supplier at about $35 per share. Boeing shares slipped 1.1%.

Trump Media & Technology Group rose 7.8% and was set to extend Monday’s strong gains. The company had announced it expected $69.4 million in proceeds from cash exercise of warrants.

(Reporting by Ankika Biswas and Lisa Mattackal in Bengaluru; Editing by Shounak Dasgupta and Maju Samuel)

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