On Wednesday, S&P Futures experienced an uptick as the artificial intelligence leader Nvidia managed to regain a portion of the losses incurred in the prior session. Futures associated with the benchmark increased by 0.2%, whereas futures for the Dow Jones Industrial Average advanced by 48 points, equivalent to a rise of 0.1%. Nasdaq-100 futures advanced 0.3%.
Nvidia experienced a slight increase on Wednesday, climbing 0.5% in the premarket, reversing the trend from the previous trading day, which was characterized by intensified concerns regarding the cyclical dynamics of the AI industry, triggered by a collaboration between Nvidia and OpenAI. Nvidia, in conjunction with prominent AI competitor Oracle, experienced a decline amid concerns that the momentum was waning, with the future expectations already reflected in the stock prices. Indicating that confidence in the AI sector remains uncertain, shares of Micron Technology initially rose on Wednesday but ultimately declined as the company’s earnings and outlook failed to meet investor expectations. The stock experienced a decline of 0.3% in its most recent trading session.
The S&P 500 concluded Tuesday’s trading session in negative territory, thereby ending a three-day streak of gains, primarily due to concerns surrounding AI-related trades. The broad market index achieved a new all-time intraday high earlier in the session and recorded a historic close the day before. The Nasdaq Composite experienced a decline, weighed down by Nvidia. Market participants may be engaging in profit-taking in response to high valuations, a concern highlighted by Federal Reserve Chair Jerome Powell during a press conference on Tuesday. Ohsung Kwon maintains a positive outlook on the AI trade, expecting that expenditure will persist at strong levels. “I believe this is an AI-driven bull market, and I anticipate that this trend is likely to persist,” he stated. “First of all, it’s not a bubble,” Kwon continued. “The entire outperformance of the Nasdaq since the end of the tech bubble has been driven by superior fundamentals in the Nasdaq compared to the S&P 500, and I believe that trend is likely to persist.” Second, we maintain the view that we are in the nascent stages of the AI investment cycle. … The trajectory appears to be contingent upon the equity market’s ongoing endorsement of corporate capital expenditure forecasts and growth projections, suggesting that this trend is poised to persist.
Market participants are exercising caution ahead of the jobless claims data scheduled for Thursday and the PCE inflation figures set to be released on Friday. They are monitoring concerning developments related to a potential government shutdown. President Donald Trump has called off a meeting with Senate Minority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries, a decision that may have had implications for averting a government shutdown ahead of the September 30 deadline. “That cancellation has led to a fresh bout of concern that funding will run out at next week’s deadline, and we could see the first shutdown since the winter of 2018-19,” wrote Deutsche Bank’s Jim Reid in a note to clients Wednesday morning.