Stock futures slump are being witnessed as investors grapple with the ongoing tech selloff. U.S. stock futures showed little change late Monday, following another difficult week for technology stocks, with anxieties over AI disruptions weighing heavily on market sentiment. Dow Jones Industrial Average futures were recently up about 33 points, or 0.1%. S&P 500 futures were up 0.1% while Nasdaq-100 futures were about flat.
Tech Sector Under Pressure
The tech sector has been under considerable pressure, with the Nasdaq Composite extending its losing streak. The Dow fell 1.2% last week, its worst week since November, while the S&P 500 slid 1.4% and the Nasdaq slumped 2.1%, extending its losing streak to five weeks — its longest since 2002. This decline is attributed to growing fears of potential future AI disruptions.
Gold and silver futures fell on Monday, while bitcoin remained below the $70,000 level. Crude oil futures rose more than 1% as investors remain anxious over possible U.S. military action against Iran. U.S. markets were closed Monday for the Presidents Day holiday.
Inflation Data and Fed Policy
The recent inflation report, showing prices rising less than expected in January, offered a glimmer of hope for a soft landing – cutting inflation to the Fed’s 2% annual target while avoiding a recession. The coming week will see the release Wednesday of the Fed’s minutes from their last meeting, and another key inflation reading — the core personal-consumption expenditures index — on Friday. related Finance news
Meanwhile, fourth-quarter earnings season is wrapping up. And while more companies have been beating earnings expectations, that hasn’t done much to boost the stock futures slump, as worries about both artificial-intelligence spending and AI’s potentially disruptive effects on certain industries — especially software — have sharply shifted investors’ sentiment.
“It is software eating itself,” Stephen Innes, managing partner at SPI Asset Management, said in a weekend note.
Earnings and Market Sentiment
This week should be quieter on the earnings front, as investors await earnings from AI bellwether Nvidia the following week. The coming week will see earnings reports from Walmart, Door Dash, Wayfair, Palo Alto Networks and Live Nation Entertainment, among others. The performance of these companies could influence market sentiment and either exacerbate or alleviate the stock futures slump.
The software and services sector of the S&P 500 is down 27% since late October. Many software companies became dramatically overvalued in recent years, “on the assumption that margins would stay stratospheric forever.” If AI compresses those margins even modestly, the equity math changes violently. Investors are closely watching these trends to gauge the sustainability of current valuations. The stock futures slump could be a sign of a broader correction in the market.
Stephen Innes also noted, “If AI compresses those margins even modestly, the equity math changes violently. A few turns off the multiple at elevated starting valuations is not a trim. It is an amputation.” The stock futures slump highlights the current uncertainty.
Despite the recent volatility and stock futures slump, some analysts remain cautiously optimistic, citing the potential for a soft landing and continued economic growth.
Source: MarketWatch
