US Stock Futures Steady After Nvidia Rebound Boosts Wall Street
US stock index futures held steady in evening deals on Tuesday, thanks to a strong comeback by Nvidia and other chipmakers. This helped support Wall Street indexes. However, investors remained cautious before key inflation data due later in the week that could impact the outlook for interest rates.
Nvidia Rebound Buoys Wall Street
Nvidia Corporation, a big name in the artificial intelligence world, surged nearly 7% on Tuesday. This recovery came after three days of sharp losses due to profit-taking and doubts about AI demand. The gains in Nvidia's stock benefited other chipmaking companies and helped strengthen Wall Street indexes despite losses in other sectors. Nvidia rose an additional 0.9% in after-hours trading.
Example of Profit-Taking
Profit-Taking: Investors sell stocks when prices are high to take profits. For instance, if someone bought Nvidia shares at $200 each and sold them at $300 each, they would earn a profit of $100 per share.
Economically Sensitive Sectors Remain Weak
Sectors sensitive to economic changes were still weak because investors were waiting for important data on inflation. This data is the Federal Reserve’s preferred inflation gauge and will likely influence the central bank’s plans for trimming interest rates. Many in the market expect the Fed to announce rate cuts, although the Fed hasn’t given any such signal. Recently, the Fed reduced its outlook for rate cuts this year.
Example of Interest Rates
Interest Rates: Think of interest rates like the cost of borrowing money. If the rates are high, borrowing becomes expensive, which can slow down spending and investments. Lower rates make borrowing cheaper, potentially boosting the economy.
Tech Boom Keeps Wall Street Strong
Despite weaknesses in certain sectors, an AI-driven boom in tech helped keep the indices like the S&P 500 and the Nasdaq close to record highs.
FedEx Surges on Positive Profit Forecast
FedEx Corporation, a major delivery and logistics company, surged 14% in after-hours trading after it forecast its fiscal 2025 profits higher than Wall Street estimates. The company reported stronger quarterly earnings by cutting expenses and tightening its operations, although demand for package deliveries was still weak. FedEx is considered a bellwether for US economic activity because its delivery volumes reflect overall business activity, which remained weak.
Example of a Bellwether
Bellwether: Think of a bellwether as a leading indicator. Just like how a change in weather can be predicted by observing certain signs, FedEx's performance can give us an idea about the overall health of the economy.
Other Aftermarket Movers
- Rivian Automotive Inc, an electric vehicle maker, jumped 46% after announcing a joint venture with Volkswagen AG. In this venture, Volkswagen will invest an initial $1 billion in Rivian.
- Lucid Group Inc, another electric vehicle maker, also rose 10%.
This summary provides a clear picture of the financial market's current situation, focusing on important movements and their potential impacts.
By understanding these terms and examples, even someone with little financial knowledge can grasp the state of the stock market and the economy.
