U.S. stock index futures and equities were mostly higher on Tuesday, showing signs of recovery after the general sell-off in technology stocks earlier in the week.
Wall Street shows signs of recovery after Nvidia losses
The technology sector is showing signs of recovery Tuesday after taking a big hit last session, when the NASDAQ Composite index lost 1.1%, its worst day on record since April, as investors took profits after the star rally that lasted the past two months.
Chipmaker stocks such as Broadcom (AVGO), U.S. shares of Taiwan Semiconductor Manufacturing (TSM) and Qualcomm Incorporated (QCOM) lost value on Monday, although Nvidia took the brunt of the sell-off as it posted a 6.7% drop and slumped for a third straight session after briefly becoming Wall Street’s most valuable company the previous week.
All in all, Nvidia is up nearly 138% so far in 2024, and analysts are still positive about the stock in the face of huge demand driven by artificial intelligence.
Awaiting PCE inflation
Earlier this week, attention has been focused on the PCE price index data, which is the Federal Reserve’s inflation gauge of choice.
The reading will be released on Friday and is expected to indicate a continued cooling of inflation, although it is also expected to remain above the Fed’s 2% annual target range.
UBS expects the Fed to begin cutting interest rates in September.
Although there has been unusual volatility in economic data since the pandemic began, some trends appear to have already settled in, according to UBS.
The labor market, severely overheated for the past two years, has almost returned to pre-pandemic conditions, supported by a solid increase in labor supply.
But in addition, retail sales and inflation are also showing signs of moderation.
In May, the core CPI, which does not take into account food and energy prices, rose just 0.16% m-o-m, the slowest growth recorded since August 2021.
While the year-over-year core inflation rate is trending downward, it is well above pre-pandemic levels.
“We maintain our base case that the Fed will be in a position to cut rates in September as it receives softer data on growth, the labor market and inflation,” they said. “We see risks skewed toward the Fed remaining on hold for longer than in our base case, but we continue to see additional rate hikes unlikely.”
June consumer confidence, the Richmond Fed index and home prices are due Tuesday.
FedEx Results
On the corporate front, FedEx (FDX) and Carnival (CCL) will release their quarterly results.
Footwear producer Birkenstock (BIRK) retreated 5% on news that one of its major shareholders plans to sell 14 million shares in a public offering.
SolarEdge Technologies (SEDG) fell 15% following the announcement of its plans to offer $300 million in new debt.
Oil falls on the back of API inventories
Oil stocks were lower on Tuesday ahead of the release of the latest data on U.S. crude inventories for the summer driving season.
By 07:10 ET, U.S. crude oil futures (WTI) were trading 0.5% lower at $81.25 per barrel, while the Brent contract was losing 0.4% at $84.78 per barrel.
Last week, both benchmarks registered an increase of around 3%, representing two consecutive weeks of rises, thanks to increased demand at a time when the United States, the world’s largest oil consumer, begins the peak summer consumption period.
The American Petroleum Institute will release its forecast for U.S. crude stockpiles later in the session, ahead of Wednesday’s official report, and stocks are estimated to have declined in the week to June 21.
