Investing.com — U.S. stock index futures fell in evening trading Sunday, trailing a rally on Wall Street after comments from Federal Reserve officials stoked hopes of a rate cut in September.
But caution has been intensified this week ahead of a series of important signals, most notably market favorite Nvidia Corp. (NASDAQ:), due to report after the close on Wednesday. Data on the Fed’s favorite inflation measure is also due to be released later in the week.
It was down 0.2% to 5,643.50 points and was down 0.2% to 19,745.0 points as of 19:45 ET (23:45 GMT). It was down slightly to 41,251.0 points.
NVIDIA profits fall as AI stocks soar
Nvidia is scheduled to report earnings for the three months ended July on Wednesday, with much of the focus shifting to whether the company can maintain its impressive pace of revenue growth, fueled by artificial intelligence.
The company’s earnings and outlook will provide further clues about the state of AI demand. A series of mixed earnings from other tech giants also raised questions about how much of the market rally driven by AI over the past year was justified. Big names like Alphabet (NASDAQ:) and Microsoft (NASDAQ:) fell after reporting their second-quarter earnings.
Nvidia, which makes some of the most advanced AI chips on the market, has been a big beneficiary of growing interest in AI, more than doubling its value in the past year to become one of Wall Street’s most valuable companies.
But that trend will be put to the test on Wednesday, as earnings from other semiconductor manufacturing giants such as TSMC (NYSE:) and ASML (NASDAQ:) reported in July showed that chipmakers, at the very least, still appear to be benefiting from AI demand.
PCE inflation expected as September rate cut expectations grow
Attention this week will also be on data from the Fed’s key inflation measure, due to be released on Friday, which will provide further clues about interest rate movements.
Comments from Fed Chairman Jerome Powell on Friday cemented expectations of a rate cut in September, but indicated traders were divided on whether a cut of 25 or 50 basis points was in order.
PCE inflation will likely be a key factor in predicting the size of the September rate cut.
Dow, S&P 500 near all-time highs
Optimism about interest rate cuts drove Wall Street stock indexes to near record highs on Friday.
The rose 1.2% to 5,634.61 points, the rose 1.1% to 41,175.08 points, and the rose 1.5% to 17,877.79 points.
But while the Dow and S&P 500 are looking at their recent peaks, the Nasdaq is trading well below the all-time high it hit earlier this year after a mix of profit-taking and doubts about the rise of AI hit tech stocks in July.
Expectations of a rate cut prompted traders to sell technology stocks and shift their focus to more economically sensitive, value-oriented sectors.
