U.S. Futures Dip as Investors Await Key Economic Data; Alphabet Surges on AI Chip Talks
U.S. stock index futures edged lower on Tuesday following a strong tech-driven rally the previous day, as investors turned their attention to upcoming economic data and corporate earnings that may reveal more about the strength of the American consumer.
While major indexes showed mild declines, Alphabet Inc. emerged as a standout performer after reports indicated that Meta Platforms may adopt Google’s AI chip technology in its data centers as early as next year.
Alphabet Leads Market Movers Amid Mixed Futures
Futures tied to major U.S. stock indices slipped modestly:
- Dow Jones futures: down 0.1%
- S&P 500 futures: down 0.2%
- Nasdaq futures: down 0.3%
Despite the overall cooling, Alphabet shares climbed 4% in premarket trading, fueled by reports that Meta is considering Google’s AI chips for large-scale deployment beginning in 2027. The social media giant may also rent Google Cloud chips starting next year, a move that investors see as a major breakthrough for Google’s AI hardware ambitions.
The development also lifted Broadcom, which partners with Google on AI chip production, sending its shares 2.5% higher. Meanwhile, rival chipmakers Nvidia and AMD fell nearly 4% each as investors reassessed competition in the AI semiconductor market.
Alphabet’s stock has now surged nearly 70% year-to-date, outperforming other mega-cap tech giants and pushing the company closer to the coveted $4 trillion market capitalization milestone.
Nasdaq Rebounds as Tech Buying Accelerates
The Nasdaq Composite posted its biggest one-day gain in six months on Monday as investors returned to tech stocks after several weeks of volatility driven by concerns over high valuations and heavy AI-related spending across the industry.
Market sentiment has recently stabilized with growing expectations that the Federal Reserve may cut interest rates in December. Dovish comments from key Federal Open Market Committee (FOMC) members, including John Williams and Christopher Waller, have supported the belief that borrowing costs will soon ease. A report also indicated that San Francisco Fed President Mary Daly supports a December rate cut.
According to the CME FedWatch Tool, traders now price in an 80% probability of a 25-basis-point cut, up sharply from around 40% just one week ago.
By 6:57 a.m. ET, the major futures contracts traded as follows:
- S&P 500 e-minis: down 0.15%
- Nasdaq 100 e-minis: down 0.31%
- Dow e-minis: down 0.12%
Global market sentiment was also influenced by ongoing developments surrounding potential Ukraine peace negotiations and improving U.S.–China trade relations.
Consumer Data in Focus
Investors are now awaiting the release of September retail sales data and the Conference Board’s November consumer confidence report, both of which are expected to provide insight into consumer strength at a time when tariff-driven prices and workforce reductions have been making headlines.
A delayed producer price index (PPI) report for September is also scheduled for release, with analysts paying close attention to components feeding into the Personal Consumption Expenditures (PCE) Index, the Fed’s preferred measure of inflation.
Derren Nathan, head of equity research at Hargreaves Lansdown, noted:
“Markets will be looking for further reassurance that the soft-landing narrative isn’t drifting toward stagflation.”
Retail Sector Shows Divergent Performance
Among companies reporting earnings:
- Kohl’s soared 22% after raising its annual profit outlook for the second time this year.
- Best Buy gained 2.5% after also increasing its annual forecast.
- Burlington Stores dropped 5.1% following quarterly revenue that fell short of expectations.
Retailers are entering one of their most crucial periods of the year, with Thanksgiving, Black Friday, and Cyber Monday expected to drive a significant portion of annual sales.
Elsewhere, U.S.-listed shares of Alibaba rose 3.2% after the Chinese e-commerce giant topped expectations for quarterly revenue.
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