Tech Stocks Retreat as U.S. Stock Futures Dip on Inflation Concerns
U.S. stock futures are retreating after a strong start to the week, with the outlook for inflation and interest rates remaining in the spotlight amid a recent outperformance in tech stocks.
Key Events to Watch in the Market Today
Investors will be closely monitoring economic data and remarks from central bank officials that could support—or disrupt—the dominant narrative around inflation and interest rates.
Latest Updates on U.S. Stock Futures and Market Outlook
U.S. stock futures retreated on Tuesday after a strong start to the week, with the outlook for inflation and interest rates remaining in the spotlight amid a recent outperformance in tech stocks.
Futures for the Dow Jones Industrial Average fell 110 points, or 0.3%, after the index rallied 216 points on Monday to finish at 37,683—less than 0.1% below a record closing high recorded last week. S&P 500 futures shed 0.3% with contracts tracking the tech-heavy Nasdaq down 0.4%.
Tech Outperforms with News from Nvidia and Decline in Inflation Expectations
Stocks staged a big rally to start the week, with the S&P 500 paring most of last week’s declines as that index and the Dow remain close to peak levels. Fueling the latest gains was a decline in consumer inflation expectations, as well as news from Nvidia that helped tech outperform after the chipmaker—which saw its stock hit a record on Monday—announced new artificial intelligence-focused products.
“The ‘tech fever’ that gripped markets last year is still in play,” said Marios Hadjikyriacos, an analyst at broker XM. “Even so, there are some red flags. Equity valuations are expensive by historical standards and that’s under the assumption that earnings growth is going to accelerate significantly this year. Therefore, the soft landing narrative has been fully priced into equity prices.”
Investors Keep a Close Eye on Economic Data and Central Bank Remarks
Investors will continue to monitor economic data and remarks from central bank officials that could support—or disrupt—the dominant narrative around inflation and interest rates. These factors will play a significant role in influencing market sentiment and guiding investment decisions.
Analyst comment
Positive news: Tech stocks outperformed and rallied at the start of the week, supported by a decline in consumer inflation expectations and news from Nvidia.
Analyst’s prediction: The market may experience some volatility as investors closely monitor economic data and central bank remarks regarding inflation and interest rates. The soft landing narrative has already been factored into equity prices, and high valuations could pose a risk to the market.
