S&P Futures exhibited minimal movement Tuesday morning following a challenging beginning to the concluding week of February’s trading activities. Futures associated with the Dow Jones Industrial Average increased by 33 points, representing an approximate 0.1% rise. S&P 500 futures remained unchanged, whereas Nasdaq 100 futures experienced a modest increase of 0.1%. Major averages declined during the regular session amid heightened concerns regarding the potential disruptions caused by artificial intelligence across various sectors. President Donald Trump’s proposal to increase global tariffs to 15% and the ongoing tensions between the U.S. and Iran have contributed to a climate of uncertainty among traders.
The 30-stock Dow experienced a decline of nearly 822 points, translating to approximately 1.7%, primarily influenced by a significant loss of around 13% in IBM shares. The tech-heavy Nasdaq Composite experienced a decline of 1.1%, whereas the S&P 500 decreased by approximately 1%, consequently entering negative territory for the year. During the session, software stocks including Microsoft and CrowdStrike experienced significant declines, alongside cybersecurity stocks and a range of names from the financial sector. “The market has experienced a decline in momentum. “It’s in this trading range … and there’s been a really unhealthy rotation,” stated Warren Pies. Consumer staples and energy sectors have experienced growth exceeding double digits in the last quarter. You have technology and financial sectors well understood. “I just am of the belief that one must step back, reduce exposure, and await the resolution of this range. For it to resolve favourably, it must be driven by technology,” he added. “One cannot extricate themselves from this situation while technology and financial sectors persist in this manner.”
Pies, who downgraded U.S. equities to neutral earlier this month, posits that tech stocks will experience upside driven by fundamental strength and rising productivity. “I believe this has been a constructive pullback, a period of consolidation … nonetheless, the prudent approach is to exercise patience and allow the market to clearly breach that range,” he stated. As Tuesday approaches, market participants are poised to monitor a significant event organised by the artificial intelligence company Anthropic, known for its development of Claude. Anthropic is anticipated to unveil new product announcements and showcase the latest features of Claude. The expectation surrounding the event, along with the potential for further disruption, played a role in the downturn observed in the software sector on Monday.
On Tuesday, market participants are anticipating the release of consumer confidence data alongside the earnings report from Home Depot. Investors are preparing for significant earnings announcements from Nvidia, as well as software companies Salesforce and Snowflake, scheduled for later this week. These results have the potential to influence market dynamics, particularly in light of the ongoing pullback in the technology sector.