S&P futures exhibit minimal variation on Tuesday as investors assess the risks associated with a stock market reaching all-time highs. S&P 500 futures declined by 0.1%, mirroring the movement in Nasdaq-100 futures. Futures associated with the Dow Jones Industrial Average experienced an increase of 24 points, representing a rise of 0.1%.
The three major averages concluded the trading day at unprecedented levels, signifying three successive sessions of gains for the S&P 500, while also achieving new intraday peaks on Monday. Gains accelerated in the latter half of the trading session following a nearly 4% increase in Nvidia shares, spurred by the chipmaker’s announcement of a $100 billion investment in OpenAI for the development of data centers. Uncertainties persist regarding the sustainability of the AI trade as a driver for U.S. equities, especially in light of the risks associated with high market valuations.
Joe Davis, observed that the rapid growth and adoption of AI, along with the Federal Reserve’s recent interest rate cut, are the two significant factors contributing to elevated multiples while “fundamentals are okay.” Davis stated When you’re at somewhat elevated levels of wealth, vulnerabilities become apparent in the face of adverse news, Closing Bell: Overtime. That’s not to say that it’s going to materialize, but I think we need to see acceleration and growth in the back half of the year or some progress on inflation, which remain stubborn. “I believe that either of those dimensions would be beneficial.” The upcoming release of the personal consumption expenditures price index, the Federal Reserve’s favored gauge of inflation, is scheduled for Friday. This data is anticipated to provide insights into the trajectory of monetary policy for the rest of the year.
Investors are closely monitoring the heightened likelihood of a government shutdown as the Sept. 30 deadline approaches, following the Senate’s recent rejection of both Republican and Democratic proposals aimed at temporarily funding the federal government. The stock market has traditionally dismissed worries associated with government shutdowns; however, the current economic context leading into a potential shutdown appears to be the most fragile in over twenty years.