U.S. stock index futures were under pressure early Tuesday, suggesting that the market may extend the previous session’s slide, with tech shares once again at the center of the downturn.
The ongoing selloff in mega-cap tech — especially market heavyweight and AI frontrunner Nvidia (NASDAQ:NVDA) — continues to drag sentiment lower. Nvidia shares were down another 1.1% in pre-market trading after falling 1.8% on Monday, as investors brace for the chipmaker’s quarterly earnings due after Wednesday’s closing bell.
With markets increasingly focused on whether the AI boom has overheated, Nvidia’s upcoming report is viewed as a crucial moment.
“As fears over an AI bubble build, there has rarely been more riding on an individual set of results than Nvidia’s on Wednesday,” said AJ Bell investment director Russ Mould. “Even a mild disappointment could reinforce the market’s worries and spark a wider sell-off.”
Alphabet (NASDAQ:GOOGL) CEO Sundar Pichai also added to the debate, telling BBC News that there has been some “irrationality” in the current AI boom and warning that “no company is going to be immune” if the AI bubble bursts.
Beyond tech worries, traders are awaiting key U.S. economic releases that were postponed during the government shutdown — including September’s nonfarm payrolls report scheduled for Thursday.
Monday’s sharp selloff
After a tentative start on Monday, stocks fell hard throughout the session, with the major indices ending at their lowest levels in a month. Although they bounced slightly off the lows into the close, losses remained substantial:
- Dow Jones: –557.24 points (–1.2%) to 46,590.24
- Nasdaq: –192.51 points (–0.8%) to 22,708.07
- S&P 500: –61.70 points (–0.9%) to 6,672.41
The decline was driven largely by renewed valuation concerns ahead of Nvidia’s earnings release.
“Just meeting expectation won’t be enough – investors want the spectre of that AI bubble popping blown clean away,” said AJ Bell head of financial analysis Danni Hewson. “Nvidia will need to surprise on the upside and provide an update that leaves people in no doubt about the outlook for the sector.”
The market also reacted to the first batch of delayed government data: a Commerce Department report showing a small and unexpected rise in August construction spending.
Although the data is now outdated, it could still influence expectations for the Fed’s December meeting, where policymakers will decide whether more rate cuts are warranted.
Sector performance
Several key industries were hit hard on Monday:
- Airlines: NYSE Arca Airline Index plunged 3.7%, its lowest close in over three months.
- Financials: Broker/dealer and bank stocks fell sharply, with respective index declines of 3.4% and 2.7%.
- Housing: The Philadelphia Housing Sector Index slid 2.7%.
- Energy, networking, and semiconductor stocks: Also suffered notable declines.
- Utilities: One of the few bright spots, posting modest gains.