U.S. stock futures point lower ahead of trading session
U.S. stock futures traded in negative territory on Tuesday morning, indicating Wall Street could open lower as investors remain cautious following Monday’s mostly weaker close despite a late-session recovery.
Technology shares are expected to remain under pressure amid growing concerns over elevated valuations after the sector’s recent rally to record highs.
Investor attention is increasingly focused on Nvidia’s (NASDAQ:NVDA) first-quarter earnings report, scheduled for release after Wednesday’s market close.
As one of the dominant companies in the artificial intelligence sector, Nvidia’s results and forward guidance are widely viewed as crucial for broader market sentiment and the outlook for AI-related stocks.
Oil prices and Treasury yields remain key concerns
Market participants also continue to monitor high oil prices and the recent jump in Treasury yields, although both eased somewhat during Tuesday morning trading.
“While the Nasdaq remains near highs and the broader AI trade is still intact, recent sessions have seen some profit-taking in semiconductors and mega-cap tech as yields rise and positioning looks increasingly stretched,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
She added, “The market is not abandoning the earnings and AI story but the combination of higher oil, higher yields and extremely strong positioning is making it harder for the sector to continue its near-vertical ascent without pauses or pullbacks.”
Stocks recover partially after early losses
Following the sharp sell-off seen last Friday, U.S. equities remained under pressure for much of Monday’s session before recovering part of their losses later in the day.
The major indexes rebounded significantly from session lows, with the Dow Jones Industrial Average turning positive before the close.
The Dow rose 159.95 points, or 0.3%, to finish at 49,686.12. Meanwhile, the S&P 500 slipped 5.45 points, or 0.1%, to 7,403.05, while the Nasdaq Composite fell 134.41 points, or 0.5%, to 26,090.73.
Middle East tensions continue to weigh on sentiment
Early weakness on Wall Street reflected ongoing concerns surrounding the conflict in the Middle East after President Donald Trump warned that for Iran the “clock is ticking.”
In a Truth Social post, Trump said Iran “better get moving, FAST, or there won’t be anything left of them,” fueling fears that the United States could resume military operations.
Axios, citing two U.S. officials, reported that Trump is expected to meet with his senior national security team in the Situation Room on Tuesday to discuss possible military responses.
The ongoing conflict between the United States and Iran has effectively shut down the Strait of Hormuz, a critical route for global energy shipments, contributing to a surge in oil prices and increasing worries about inflation and interest rate policy.
Treasury yields jumped sharply last Friday as investors speculated that the Federal Reserve’s next move on interest rates could potentially be a hike rather than a cut.
Oil prices and bond yields continued climbing through Monday’s session, further pressuring equity markets.
However, stocks pared losses late in the day after Trump said he had decided to delay military action against Iran following requests from Middle Eastern leaders.
Trump stated that he had instructed the military to be “prepared to go forward with a full, large scale assault of Iran, on a moment’s notice, in the event that an acceptable Deal is not reached.”
Semiconductor stocks among biggest decliners
Chipmakers posted some of the steepest losses during Monday’s session, dragging the Philadelphia Semiconductor Index down 2.5%.
Computer hardware shares also weakened significantly, with the NYSE Arca Computer Hardware Index dropping 2.2%.
In contrast, oil service companies outperformed as rising energy prices pushed the Philadelphia Oil Service Index up 3.4%.
Oil producers, telecommunications companies and commercial real estate stocks also posted gains, helping offset part of the broader market decline.