S&P 500, Nasdaq Futures Decline Ahead of US Return: Markets Wrap
(Bloomberg) — US equity-index futures fell and Treasuries edged higher, underscoring a cautious mood heading into the market’s reopening after a holiday.
Contracts for the S&P 500 dropped 0.4% and those for the Nasdaq 100 Index slipped 0.8% in a sign of risk aversion before the US returned Tuesday after observing the Presidents’ Day holiday on Monday. Asian stocks fell 0.2% in thin trading, with China, Hong Kong and several regional markets shut for the Lunar New Year. European shares were also set for a weaker open.
Treasury 10-year yields fell two basis points to 4.03%. Precious metals slid, while crude oil held its gains, with traders pricing in higher geopolitical risk after Iran held naval exercises near a critical shipping corridor before talks with the US.
“Several market holidays and a lack of fresh catalysts are putting stocks on the defensive today,” said Tim Waterer, a market analyst at KCM Trade. “Traders are headline-watching events between the US and Iran, with the latter’s recent drills just doing enough to dull any signs of risk appetite.”
Developments in the Middle East have thrust geopolitical risk back into focus, as traders also weigh the outlook for Federal Reserve interest-rate cuts following Friday’s inflation data. Shifting sentiment around artificial intelligence is adding to the unease, rippling beyond the tech sector amid the emergence of the so-called AI scare trade.
Iranian Foreign Minister Abbas Araghchi held talks with the head of the UN’s atomic watchdog in Geneva on Monday, ahead of a second round of nuclear negotiations with the US.
Trump has threatened to strike the Islamic Republic unless it agrees to a deal curbing Tehran’s nuclear program in exchange for sanctions relief. He’s mobilized warships and fighter jets near Iran in response to a recent deadly crackdown by the regime there following mass protests.
Investors seeking clues on the Fed’s rate path will get a chance Tuesday, when Governor Michael Barr speaks on the labor market and AI, while San Francisco Fed President Mary Daly discusses AI and the economy. Traders will also be watching for ADP private payrolls numbers on Tuesday and the minutes from the Fed’s January meeting on Wednesday for a fresh read on the economy.
Meanwhile, the impact of AI, which has driven selling pressure across multiple stock-market sectors in recent weeks, continued to draw attention.
A JPMorgan Chase & Co. team led by Mislav Matejka urged caution on stocks at risk of AI-driven “cannibalization” including software, business services and media companies.
Firms are developing tools to capitalize on the divergence. Goldman Sachs Group Inc. launched a new basket of software stocks that goes long firms that will benefit from AI adoption, while shorting the companies whose workflows could be replaced.
With AI disruption rippling through markets, a lot will come down to earnings resilience, particularly in the US.
“When you look at the current earnings season, the companies are showing 13% growth,” Nataliia Lipikhina, head of EMEA equity strategy at JPMorgan, told Bloomberg TV. “Overall, this is the reason why we continue to be positive on the S&P.”
Corporate Highlights:
BHP Group’s shares soared after the company said earnings for the six months to the end of December rose by more than a fifth, thanks to a surge in copper prices. Apple Inc. said on Monday it is holding a product launch on March 4, with the company preparing to announce several new devices in the coming weeks. Alibaba Group Holding Ltd. unveiled a major upgrade of its flagship AI model, accelerating a race with a panoply of startups and sectoral leaders aiming to get in ahead of Chinese sensation DeepSeek’s next big platform. Advanced Micro Devices Inc. is partnering with Tata Consultancy Services Ltd. to deploy the US chipmaker’s latest AI data center technology in India, challenging Nvidia Corp. in one of the world’s fastest-growing markets. Hyatt Hotels Corp. Executive Chairman Tom Pritzker said he’s retiring from his position at the company and won’t stand for reelection to its board, citing an association with the late disgraced financier Jeffrey Epstein. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.4% as of 12:56 p.m. Tokyo time Japan’s Topix fell 0.9% Australia’s S&P/ASX 200 rose 0.4% Euro Stoxx 50 futures fell 0.4% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1842 The Japanese yen rose 0.2% to 153.14 per dollar The offshore yuan was little changed at 6.8878 per dollar Cryptocurrencies
Bitcoin fell 0.5% to $68,472.7 Ether fell 0.5% to $1,987.82 Bonds
The yield on 10-year Treasuries declined two basis points to 4.03% Japan’s 10-year yield declined 3.5 basis points to 2.160% Australia’s 10-year yield declined two basis points to 4.69% Commodities
West Texas Intermediate crude rose 1% to $63.53 a barrel Spot gold fell 0.6% to $4,960 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Aya Wagatsuma.
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