Market Analysis

US Futures Steady After Nvidia-Led Decline Shakes Wall Street

Amos Simanungkalit · 08 Jan41K Views

Image Credit: Reuters

U.S. stock index futures remained mostly flat on Tuesday evening, stabilizing after Wall Street was weighed down by uncertainty over slower interest rate cuts and sharp losses in Nvidia.

Losses in NVIDIA Corporation (NASDAQ: NVDA) put significant pressure on the broader tech sector, compounded by a rise in Treasury yields after data signaled ongoing inflationary pressures, reinforcing the likelihood of a slower pace of Federal Reserve monetary easing.

S&P 500 Futures dipped 0.1% to 5,950.75 points, while Nasdaq 100 Futures held steady at 21,358.50 points. Dow Jones Futures edged slightly lower to 42,778.0 points by 18:16 ET (23:16 GMT).

Nvidia plunges after CEO address at CES 2025

Nvidia led the losses in the tech sector, slumping 6.2% from record highs on Tuesday, though it recovered slightly in after-hours trading.

CEO Jensen Huang, speaking at the Consumer Electronics Show (CES) in Las Vegas, unveiled new offerings, including advanced graphics chips, proprietary AI models, partnerships with automakers for self-driving technologies, and a desktop supercomputer. He also announced the production ramp-up of the company’s next-generation Blackwell AI chips.

While these developments underscore Nvidia’s strong long-term potential, analysts noted that the announcements added little to its short-term outlook.

The company’s stock, which had tripled in value through 2024, was hit by a wave of profit-taking as much of the optimism was already factored into its record highs before the event.

Other major tech stocks followed suit, with Apple Inc. (NASDAQ: AAPL) dropping over 1% after receiving its second sell rating in three months. Tesla Inc. (NASDAQ: TSLA) tumbled 4.1% after Bank of America downgraded the stock, citing overvaluation concerns and challenges in achieving its ambitious AI goals.

Wall Street rattled by inflation and rate concerns

Wall Street indices fell on Tuesday, weighed down by rising Treasury yields following stronger-than-expected job openings data, which pointed to ongoing resilience in the labor market.

Additionally, better-than-expected purchasing managers index (PMI) data fueled worries over persistent inflation.

The combination of sticky inflation and a robust labor market has led to expectations that the Federal Reserve will maintain a cautious approach to cutting interest rates in 2025. Fed officials recently reiterated this stance, heightening investor unease.

The spotlight is now on December’s nonfarm payrolls data, set to be released on Friday, for more insights into the Fed’s potential rate trajectory.

On Tuesday, the S&P 500 dropped 1.1% to 5,909.50 points, while the NASDAQ Composite fell 1.9% to 19,491.65 points. The Dow Jones Industrial Average declined 0.4% to 42,529.28 points.