S&P500: US Stocks Ease From Highs as Alphabet AI Spending Raises Questions

Futures Fade After Nine Straight Weeks of Gains

June E-mini S&P 500 Index futures are down 0.2% in early Tuesday trading. June E-mini Nasdaq-100 Index futures are off 0.1%. Dow futures are down about 213 points or 0.4%. All three indexes hit records on Monday. The pullback is not a surprise after nine consecutive daily gains.

Alphabet is down more than 2% in premarket after announcing an $80 billion stock sale to fund AI expansion. That one headline is doing most of the damage. Nvidia is up 1.6% and keeping the losses from getting worse.

Alphabet’s $80 Billion Sale Spooks the Market

Alphabet dropped more than 2% in premarket. That is dragging the entire futures complex lower. The company announced plans to raise $80 billion through stock sales to fund its AI expansion. The stock popped in after-hours initially. Then investors started asking questions. Why does a company sitting on that much cash flow need to sell stock to pay for AI? That question flipped the trade. One of the most profitable companies in the world just went to the equity market for funding. That tells you the AI buildout is more expensive than some investors thought.

Nvidia is up 1.6% in premarket and keeping tech from falling harder. The AI trade is not dead. But Alphabet just showed the Street that the cost side of the story is bigger than the revenue side right now.

Hewlett Packard Enterprise Crushes Earnings

HPE is up 26% in premarket. Quarterly results beat across the board. Full-year guidance went higher. Current-quarter outlook came in above the Street. Biggest earnings surprise HPE has delivered in years.

Microchip Technology is up 12% and that move is all data center. The growth numbers were strong and management said more is coming. Credo Technology beat estimates and dropped 12%. That is the part of this market nobody wants to talk about. You can beat the number and still get sold if the Street already priced in the upside. AI stocks are carrying that risk right now. The bar keeps going up and eventually the beats stop being enough.

Iran Tensions Keep Oil Bid

Reports suggest Iranian officials may halt indirect communications with Washington. They could take steps affecting the Strait of Hormuz. West Texas Intermediate crude oil and Spot Brent crude oil are both higher on the headlines.

President Trump said peace talks are continuing. He also said he is not concerned about reports that discussions could be ending. The mixed messaging is keeping crude bid. Nine straight weeks of gains with oil rising on top of it adds a layer of caution that was not there yesterday.

Daily June E-mini S&P 500 Index Futures Technical Analysis

June E-mini S&P 500 Index futures are edging lower on Tuesday, but trading inside yesterday’s range, suggesting investor indecision and impending volatility.

The main trend is up according to the swing chart. A trade through 7632.25 will reaffirm the uptrend. The main trend will change to down on a move through the swing bottom at 7354.25.

The main range is 7354.25 to 7632.25. Its retracement zone at 7493.25 to 7460.50 is the nearest major support zone.

The minor trend is also up. The minor trend will change to down if 7515.00 fails as support. This will shift momentum to the downside.

7515.00 to 7632.25 is the minor range, making 7573.75 the nearest pivot price support. Breaking this level today will make 7632.25 a new minor top and indicate some light profit-taking.

Essentially, we’re looking at a series of minor levels that tend to produce minor patterns. But if we get a new high through 7632.25 and a lower close, that will indicate the selling pressure is a little more serious.

With the main trend up, the market is still in “buy the dip” mode. It’s just a matter of where traders see value today, at 7573.75 or at 7493.25.

Daily June E-mini Nasdaq-100 Index Futures Technical Analysis

June E-mini Nasdaq-100 Index futures are drifting lower early Tuesday. A trade through 30693.00 will signal a resumption of the uptrend.

A trade through 30228.00 will be an early sign of weakness. Taking out 29763.00 will change the minor trend to down and shift momentum to the downside. This could lead to a test of the main retracement zone at 29678.00 to 29438.50.

The main trend will change to down on a trade through 28663.00.

A failure at 30228.00 will probably indicate profit-taking. If traders want to alleviate some of the upside pressure then we should see the selling extend into 29678.00 to 29438.50. Since the main trend is up, buyers are likely to return on a test of this area.

Like the S&P 500, there is no resistance so we’re going to have to rely on a closing price reversal top chart pattern to tell us that the selling may be greater than the buying at current price levels.

Daily E-mini Dow Jones Industrial Average Futures Technical Analysis

The key level to watch today in the E-mini Dow is the minor pivot at 50885. Taking out this level will be a sign of weakness. If this move generates enough downside momentum then look for the selling to possibly extend into the support zone at 50268 to 50005.

Look for buyers to return on a test of the support area.

What to Watch

Futures are lower but the selling is inside Monday’s range. Nobody is panicking. Nine straight weekly gains and a record high on the S&P 500. Some profit-taking was overdue. The real question is where the buyers show up. 7573.75 is the first level. If that holds the pullback is noise. If it breaks the main retracement zone at 7493.25 to 7460.50 is the next stop and that is where the real test happens.

Alphabet is the weight. Nvidia is the counterweight. One company just told the Street that AI costs more than expected. The other is still printing money from it. Those two names are pulling the market in opposite directions today. Whichever one wins by the close sets the tone for Wednesday.

The Nasdaq needs to hold 30228.00. A break there signals early weakness and could pull the selling toward 29678.00 to 29438.50 where buyers are expected. The Dow pivot at 50885 is the early warning level. All three indexes are still in confirmed uptrends with no resistance above and no reversal pattern confirmed. Until that changes, dips are for buying.

More Information in our Economic Calendar.