U.S. stock index futures pointed to a weaker start on Tuesday, with markets expected to surrender part of Monday’s gains as renewed selling pressure emerged across the technology sector.
Samsung sell-off dents AI sentiment
Technology shares looked set to lead the decline after South Korean memory chip giant Samsung Electronics suffered a near 7% drop despite reporting a sharp increase in second-quarter earnings.
Although Samsung posted a 19-fold jump in quarterly profit, investors remained concerned about the sustainability of spending on artificial intelligence and future demand for AI-related hardware.
“Although Samsung’s results were stellar, investors are getting nervous about the scale of money ploughing into AI and whether it’s a bubble waiting to burst,” said Dan Coatsworth, head of markets at AJ Bell.
Additional pressure on semiconductor stocks followed a Reuters report that Chinese AI company DeepSeek is developing its own artificial intelligence chip, potentially reducing reliance on established suppliers.
Monday’s rally driven by technology
Wall Street finished broadly higher on Monday following the Independence Day holiday, with all three major benchmarks ending in positive territory and the Dow Jones Industrial Average reaching another record closing high.
The Nasdaq Composite outperformed with a gain of 288.49 points, or 1.1%, to close at 26,121.16. The S&P 500 advanced 54.19 points, or 0.7%, to 7,537.43, while the Dow added 155.84 points, or 0.3%, to finish at 53,055.91.
Hardware and chipmakers powered gains
Technology stocks were the standout performers during Monday’s session, particularly companies linked to computer hardware.
The NYSE Arca Computer Hardware Index climbed 3.4%, supported by a 4.4% jump in Dell Technologies (NYSE:DELL) after President Donald Trump promoted the company’s computers during an Oval Office event marking the market open.
Networking and semiconductor stocks also posted strong gains, with the NYSE Arca Networking Index rising 2.8% and the Philadelphia Semiconductor Index advancing 2.2%.
Outside the technology sector, brokerage firms outperformed, lifting the NYSE Arca Broker/Dealer Index by 2.1%. Banking and steel shares also moved higher, while pharmaceutical, telecommunications, housing and utility stocks underperformed.
Services sector continues to expand
On the economic front, the Institute for Supply Management reported that activity in the U.S. services sector expanded at a slightly slower pace in June.
The ISM Services PMI slipped to 54.0 from 54.5 in May, matching economists’ expectations. A reading above 50 continues to indicate expansion across the services sector.