Nasdaq Index, Dow Jones, S&P 500 News: Futures Signaling Early Weakness

U.S. Stock Futures Point Lower Following Monday’s Decline

U.S. stock futures are drifting lower on Tuesday, continuing the previous session’s losses on Wall Street. The Nasdaq Composite, driven by technology stocks, retreated from record highs, despite gains from AI leader Nvidia.

At 13:00 GMT, Dow futures are trading 38924.00, down 98.00 or -0.25%. S&P 500 Index futures are at 5120.50, down 17.75 or -0.35% and Nasdaq-100 futures are trading 18152.75, down 109.25 or -0.60%.

Stocks in Focus

AMD saw a 2% decline in its shares after a Bloomberg News report highlighted regulatory obstacles preventing the chipmaker from selling an AI chip to China. On the flip side, GitLab experienced a significant tumble of over 20% after posting a conservative full-year forecast.

Target Surpasses Earnings Estimates

Target reported robust fourth-quarter earnings and revenue, sending its shares soaring by 7%. Earnings per share stood at $2.98, excluding items, with revenue reaching $31.92 billion. This outperformed analyst forecasts of $2.42 per share on revenue of $31.83 billion, although the company’s guidance for the forthcoming year was less inspiring.

Apple Faces Challenges in China

Apple shares slid around 2% in premarket trading after reports of soft iPhone sales in China emerged. Counterpoint Research noted a 24% decline in iPhone sales during the initial six weeks of 2024. This decline adds to recent concerns for Apple, despite its strong performance in 2023.

Bubble or No Bubble?

Large-cap tech companies continue to be favored amid the AI trend, offering substantial growth potential despite lofty valuations. While concerns of market exuberance reminiscent of 1996 persist, many analysts, including Jeremy Siegel, argue against likening the current market to the dot-com bubble.

Short-Term Forecast

Given the prevailing uncertainties in both domestic and global markets, caution is warranted. The short-term outlook leans towards bearish as investors worry about valuation, with volatility likely to persist. Investors should closely monitor developments and consider adjusting their strategies to address potential market downturns.

Although we’re leaning toward short-term bearish, we’re not calling for a steep downtrend, just a price adjustment to alleviate some of the upside pressure. The price action also suggests that investors are being cautious about adding to their bullish holdings ahead of Fed Chair Powell’s testimony on Wednesday.

Technical Analysis

E-mini S&P 500 Index futures are drifting lower for a second session on Tuesday in an early sign that perhaps upside momentum is slowing.

The trend is up. A trade through 5157.75 will signal a resumption of the uptrend. A move through 5060.00 will change the short-term trend to down with the next target the 50-day moving average at 4929.30.