Nasdaq, S&P 500 Futures Tick Higher After 7-Day Rally Snaps — Traders Eye Fed Signals As Shutdown Uncertainty Lingers
Fund manager Louis Navellier shrugged off talks of an AI bubble burst like the one seen in 1999, reasoning that this time around, the players are huge companies with healthy balance sheets and strong cash flow.
U.S. stocks appear on track to shake off Tuesday’s losses, with the major index futures all trading higher late in the day. Uncertainty over the government shutdown persisted, with President Donald Trump considering mass layoffs as a means to rein in spending.
The ongoing artificial intelligence (AI) deal news flow and investments will likely provide an offsetting impact. A Bloomberg report, citing people familiar with the matter, stated that Nvidia would invest $2 billion in Elon Musk-led AI startup xAI as part of the latter’s latest funding round.
Fund manager Louis Navellier shrugged off talks of an AI bubble burst like the one seen in 1999, reasoning that this time around, the players are huge companies with healthy balance sheets and strong cash flow.
As of 11 p.m. ET on Tuesday, the S&P 500 and Nasdaq 100 futures rose 0.14% and 0.19%, respectively, and the Dow futures were up a more modest 0.10%. The Russell 2000 futures climbed 0.25%.
The S&P 500 Index snapped a seven-session winning streak on Tuesday as traders, using the ongoing shutdown and data showing rising inflation expectations, booked profits on recent gains. The Russell 2000 Index fell by the most (down 1.12%), dragged down by concerns about the trajectory of interest rates. Some heavily-weighted stocks, including Oracle (ORCL), Nvidia (NVDA) and Tesla (TSLA), fell sharply, denting sentiment toward the tech sector.
The SPDR S&P 500 ETF (SPY), an exchange-traded fund (ETF) that tracks the S&P 500 Index, and the Invesco QQQ Trust (QQQ) slipped 0.37% and 0.53%, respectively. The SPDR Dow Jones Industrial Average ETF Trust (DIA) moved down 0.19%, while the iShares Russell 2000 ETF (IWM) slumped 1.07%.
Navellier conceded that the market breadth and power need to improve overall, but he does not subscribe to the theory of a stock market bubble. The fund manager said traders can confidently invest in stocks as long as earnings estimates continue to move northward and the Fed keeps lowering rates.
On the economic front, the minutes of the Federal Reserve’s September rate-setting meeting, in which the central bank resumed its cuts, will be released at 2 p.m. ET. Traders will likely sift through the report for cues on the Fed’s future course of action. More Fed speakers will be in action on Wednesday, including St. Louis Fed’s Alberto Musalem (9:20 p.m. ET), Fed Governor Michael Barr (9:30 p.m. ET and 5:45 p.m. ET), Minneapolis Neel Kashkari (3:15 p.m. ET), and Chicago Fed’s Austan Goolsbee (7:15 p.m. ET).
AZZ, Inc. (AZZ) is scheduled to report its financial results after the market closes.
Crude oil extended its gains in Wednesday’s Asian session, and gold futures are continuing their record run, with the yellow metal trading past the $4,000 psychological barrier. The U.S. 10-year Treasury note yield ticked up in the Asian session after slipping 3.5 basis points on Tuesday. The dollar has firmed up against most major currencies.
Major Asian markets traded mixed, with the Japanese, Indonesian, and New Zealand markets recording gains, while the Hong Kong and Taiwanese markets fell sharply. China and South Korea remained closed for public holidays.
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