U.S. stock index futures experienced a slight decline on Tuesday as investors adopted a cautious approach in anticipation of Nvidia’s quarterly report, a key player in artificial intelligence chips, and the release of the Federal Reserve’s meeting minutes.
The recent surge in technology stocks propelled the S&P 500 and the Nasdaq to their highest closing levels in over three months. Investors continued to express confidence in the belief that the Federal Reserve had concluded its rate-hiking cycle.
Big Tech stocks, major contributors to the S&P 500’s performance this year, face a critical evaluation with Nvidia set to announce third-quarter results after the market closes. While expectations surround another impressive revenue forecast, the focus will be on the repercussions of expanded U.S. restrictions on high-end chip sales to China.
Stuart Cole, Head Macro Economist at Equiti Capital, noted, “The market is expecting a large pick-up in revenue growth in Q3, with expectations of an even bigger number for Q4.” Cole emphasized that potential challenges, such as a China slowdown, make the company’s 2024 guidance crucial for future stock performance.
In premarket trading, Nvidia shares remained flat, while other megacap stocks showed mixed movements.
Ahead of Nvidia’s report, investors await the minutes of the Fed’s November meeting, hoping for insights into the monetary policy trajectory following indications of slowing inflation. The release is scheduled for 1400 ET (1900 GMT).
Traders have already factored in the likelihood of the Fed maintaining interest rates in December, with 28% anticipating a rate cut as early as March, according to the CME Group’s Fedwatch tool.
This week’s economic data is light, with a report on existing home sales later in the day. Thin trading volumes are anticipated as the market approaches the Thanksgiving holiday.
On the retail earnings front, Lowe’s Cos dropped 4.2% after projecting a larger decline in annual comparable sales and trimming its profit forecast. Best Buy slipped 3.1% after anticipating a steeper drop in annual comparable sales, while Kohl’s Corp shed 4.4% after missing third-quarter sales estimates.
As of 7:18 a.m. ET, Dow e-minis were down 56 points, S&P 500 e-minis down 6.5 points, and Nasdaq 100 e-minis down 23.25 points.
In other stock movements, U.S.-listed shares of Baidu gained 2.0% as the Chinese internet search engine provider’s third-quarter revenue surpassed estimates.
