Investing.com – U.S. stock index futures fell slightly in evening trade on Monday as a rotation out of heavyweight technology stocks weighed on Wall Street, but expectations of future interest rate cuts limited overall losses.
Sentiment toward the technology industry has soured this week ahead of the release of quarterly results from artificial intelligence darling NVIDIA Corporation (NASDAQ: NVIDIA) on Wednesday. Investors will be watching to see if the AI trade remains in play.
The expectation that lower interest rates would trigger an economic recovery also led to a shift to more economically sensitive sectors.
fell 0.1% to 5,632.50 points, while by 19:32 ET (23:32 GMT) it was down 0.1% to 19,572.50 points. fell 0.1% to 41,309.0 points.
Dow hits record high as tech market turns
The index hit a record high on Monday as a rotation out of technology stocks benefited the index constituents.
The Dow closed up 0.2% at 41,240.52 points. Losses in major technology stocks, particularly Nvidia, pushed the US500 down 0.3% to 5,616.84 points, while the index fell 0.8% to 17,729.28 points.
Tech companies nervous, Nvidia falls despite expected profits
Technology stocks fell on Monday and appeared nervous in after-hours trading, with the focus on Nvidia’s earnings on Wednesday.
Investors were particularly nervous about Nvidia after earnings figures from other technology heavyweights suggested that artificial intelligence might not be the outstanding earnings driver as initially priced in.
Nvidia fell 2.3% on Monday and was unchanged in after-hours trading, but despite being pressured by a recent slump in the technology sector, the stock has still posted a significant increase so far this year — about 150%.
The stock has been at the center of a massive AI-driven run of value over the past year. But that rally seemed to crumble over the past two months, at least in the broader technology sector.
Nevertheless, earnings reports released in July by other major chipmakers – namely TSMC (NYSE:) and ASML (NASDAQ:) – suggested that at least the chipmaking sector would continue to benefit from demand for artificial intelligence.
Interest rate cut for September in focus, reduction of 25 basis points priced in
Due to the prospect of lower interest rates, the general sentiment towards equity markets remained relatively optimistic.
Dovish comments from Federal Reserve officials, particularly Chairman Jerome Powell, led traders to price in a rate cut of at least 25 basis points in September.
But the Fed’s change in tone, which came against a backdrop of signs of a significant slowdown in the labor market, raised some concerns about a slowdown in economic growth.
