Key Takeaways:
- Stock futures were little changed Sunday evening, signaling a cautious start to the trading week.
- The flat open follows a choppy previous week where the artificial intelligence (AI) trade faced pressure from valuation fears and shifting Federal Reserve rate cut expectations.
- Investors are looking ahead to a crucial week of corporate earnings, with AI giant Nvidia and major retailers like Walmart and Home Depot set to report.
- Major indices saw mixed results last week, with the Nasdaq Composite declining while the Dow and S&P 500 posted minor gains.
U.S. stock futures remained steady Sunday night as investors paused to assess the market after a volatile week that tested the high-flying artificial intelligence sector.
Futures tied to the Dow Jones Industrial Average dipped slightly by 58 points, or about 0.1%. Meanwhile, S&P 500 futures and Nasdaq-100 futures hovered near the flatline, indicating uncertainty heading into the new week.
A Look Back at a Choppy Week
The cautious sentiment follows a turbulent period on Wall Street. The tech-heavy Nasdaq Composite finished last week down 0.5%, dragged lower by declines in market leaders like Alphabet, Amazon, and Meta Platforms.
In contrast, the Dow Jones Industrial Average and the S&P 500 managed to eke out small weekly gains, though they experienced sharp single-day drops, particularly on Thursday. The market’s recent choppiness has been attributed to a combination of factors, including concerns that stock valuations have become stretched, a rotation of capital within different sectors, and a recalibration of expectations for when the Federal Reserve might begin cutting interest rates.
All Eyes on Nvidia and Consumer Health
This week is packed with market-moving events, primarily on the corporate earnings front. The health of the AI trade will be under the microscope when Nvidia reports its quarterly results on Wednesday. The chipmaker’s performance is often seen as a bellwether for the entire technology and AI sector.
Investors will also get critical insights into the state of the American consumer as several retail giants are scheduled to release their earnings. Key reports to watch include:
- Home Depot (Tuesday)
- Target (Wednesday)
- Walmart (Thursday)
- Lowe’s (Wednesday)
- TJX (Wednesday)
- Ross Stores (Thursday)
These results will provide a clearer picture of consumer spending habits amid ongoing economic uncertainty.
Analyst Outlook: Short-Term Chop, Long-Term Gain?
Despite the recent turbulence, some market analysts remain optimistic. “We had expected the first couple weeks of November to be choppy, and it certainly looks like we are in the midst of the chop,” wrote Tom Lee, head of research at Fundstrat.
Lee noted that while some market worries have been resolved, others persist. However, he anticipates the current volatility will eventually subside, predicting a rally that could push the S&P 500 significantly higher. “We expect the current chop to ultimately give way to a rally and ultimately add roughly 200 points to take the S&P 500 over 7,000,” he added. For now, traders are awaiting fresh data to guide their next moves.