A trader works on the floor of the New York Stock Exchange on Aug. 4, 2022.
Source: NYSE
Stock futures were little changed in overnight trading Sunday following a losing week on Wall Street with the AI trade losing steam.
Futures tied to the Dow Jones Industrial Average edged up 17 points. S&P 500 futures and Nasdaq 100 futures were both flat.
U.S. stocks slipped last week as cracks appeared in a key pillar of the bull market rally — enthusiasm surrounding artificial intelligence buildout. Nvidia’s eye-popping $100 billion partnership with OpenAI drew investor skepticism towards the sustainability of the business.
The S&P 500 fell 0.3% last week, its worst week since Aug. 1, and now sits 0.8% off its record high. The Nasdaq dropped 0.7%, also its weakest since early August. The Dow edged down 0.2%, its first loss in three weeks.
“The narrative shifted modestly last week in a negative direction as investors questioned two key assumptions underpinning the rally: the sustainability of the AI infrastructure boom and the inevitability of an aggressive Fed easing cycle,” Adam Crisafulli, founder of Vital Knowledge, said in a note.
Weekly jobless claims came in lower than expected Thursday, while second-quarter GDP was revised up to 3.8%. The stronger data fueled concerns the Fed may be slower to cut rates, threatening one of the bulls’ key catalysts.
All eyes are turning to the September nonfarm payrolls report, which is due Friday morning. Wall Street may need another “goldilocks” number to keep the bull market going — not too hot as to turn policymakers hawkish and not too cold to indicate a major slowdown.
The market is still poised for modest gains for the month of September. The S&P 500 is up 2.8% this month, while the Dow has gained 1.5%. The tech-heavy Nasdaq has been the outperformer with a 2.9% rally.