The major U.S. index futures are currently pointing to a higher open on Wednesday, with stocks likely to regain ground after moving sharply lower over the past several sessions.
Bargain hunting may contribute to initial strength on Wall Street following the recent pullback, which saw the Nasdaq and the S&P 500 close lower for four straight sessions.
The tech-heavy Nasdaq tumbled to its lowest closing level in three months on Tuesday, while the S&P 500 fell to a one-month closing low.
Overall trading activity may be somewhat subdued, however, as traders await earnings news from AI darling and market leader Nvidia (NASDAQ:NVDA).
Nvidia, which is due to report its fourth quarter results after the close of today’s trading, is jumping by 2.7 percent in pre-market trading after moving sharply lower over the past few sessions.
“Nvidia is due to report its fourth-quarter and full-year results on Wednesday and investors will be looking forward to the usual demolition of forecasts and also positive guidance for the next quarter from chief executive Jensen Huang,” said AJ Bell investment director Russ Mould.
“Failure to deliver the customary upside surprise might not sit well,” he added. “Nvidia’s shares are no higher than they were last summer, despite strong earnings and ongoing investor enthusiasm for all things related to artificial intelligence, so any unexpected disappointment could cause some share price turbulence.”
After moving sharply lower early in the session, stocks regained some ground over the course of the trading day on Tuesday but remained firmly negative. With the continued weakness, the Nasdaq and the S&P 500 closed lower for the fourth straight session.
The Nasdaq plunged 260.54 points or 1.4 percent to a three-month closing low of 19,026.39 and the S&P 500 slid 28.00 points or 0.5 percent to a one-month closing low of 5,955.25, although the narrower Dow bucked the downtrend and climbed 159.95 points or 0.4 percent to 43,621.16.
Significant weakness among technology stocks weighed on Wall Street, as reflected the notable slump by the tech-heavy Nasdaq.
Traders continued to express concerns about the sustainability of the artificial intelligence trade, with AI darling Nvidia tumbling by 2.8 percent ahead of the release of its fourth quarter results after the close of trading on Wednesday.
The selling pressure also came amid concerns about the outlook for the economy following the release of a Conference Board report showing a significant deterioration by U.S. consumer confidence in the month of February.
The Conference Board said its consumer confidence index plunged to 98.3 in February from an upwardly revised 105.3 in January.
Economists had expected the consumer confidence index to dip to 103.0 from the 104.1 originally reported for the previous month.
Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board, noted the consumer confidence index saw its largest monthly decline since August 2021.
“This is the third consecutive month on month decline, bringing the Index to the bottom of the range that has prevailed since 2022,” said Guichard. “Of the five components of the Index, only consumers’ assessment of present business conditions improved, albeit slightly.”
She added, “Average 12-month inflation expectations surged from 5.2% to 6% in February. This increase likely reflected a mix of factors, including sticky inflation but also the recent jump in prices of key household staples like eggs and the expected impact of tariffs.”
Semiconductor stocks showed a substantial move to the downside on the day, with the Philadelphia Semiconductor Index tumbling by 2.3 percent.
Computer hardware and software stocks also saw considerable weakness, contributing to the steep drop by the tech-heavy Nasdaq.
A sharp pullback by the price of gold also weighed on gold stocks, resulting in a 1.6 percent drop by the NYSE Arca Gold Bugs Index.
Notable weakness was also visible among oil, financial and airline stocks, while housing and pharmaceutical stocks showed strong moves to the upside.
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