Wall Street is starting Wednesday with a cautious air, signaling a potential dip after the tech-fueled rally on Tuesday. Investors are taking a step back, with index futures pointing to a modestly lower opening. The tech sector, which spearheaded the previous session’s gains, is under pressure again, with Nvidia, Apple, and Tesla all experiencing declines in pre-market trading.
Chipmakers and chip designers are also in the spotlight. Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) has alerted U.S. authorities about a potential breach of export rules, while Qualcomm Inc. (QCOM) faces the risk of its chip design license being revoked by Arm Holdings Plc. (ARM).
Several key companies are on investors’ radar as they prepare to release their earnings reports. Tesla, Boeing, AT&T, Starbucks, Spirit Airlines, and McDonald’s will all be scrutinized for their financial performance.
While the Nasdaq 100 is down 0.30% in pre-market trading, the S&P 500 and Dow Jones futures are also experiencing declines, indicating a broader sense of uncertainty. This follows a day where the Nasdaq Composite managed to close in the green, buoyed by the tech sector, but other major indices ended the day in the red.
The recent rise in benchmark US 10-year treasury yields, reaching their highest point since July, has also been weighing on investor sentiment. Despite this, the International Monetary Fund (IMF) remains optimistic about U.S. growth, revising its projected GDP growth rate to 2.8% for 2024 and 2.2% for 2025.
Meanwhile, gold prices continue their impressive climb, hitting a new all-time high of $2,772.55 an ounce. This marks the fourth consecutive day of record highs for the precious metal, indicating investor confidence in its safe-haven appeal.
Several economic data points are scheduled for release throughout the day, including the Fed Governor Michelle Bowman’s speech, existing home sales figures, a speech by the Federal Reserve Bank of Richmond President Thomas Barkin, and the release of the latest ‘Beige Book’.
The energy sector is also facing downward pressure, with crude oil futures falling nearly 1.8% in the early New York session. This decline is attributed to data showing a rise in U.S. oil inventory, exceeding market expectations. The 10-year Treasury note yield has also ticked upward, reaching 4.222%.
Globally, Asian markets presented a mixed picture on Wednesday. Chinese markets edged upwards, while Japan’s Nikkei 225 index declined. European stocks exhibited tentativeness in early trading, mostly trading lower.
As investors navigate this period of cautious optimism, the tech sector will continue to be a crucial factor to watch, while the upcoming earnings season will offer valuable insights into the health of various industries.
