US equity futures remained steady on Monday night after a dip in tech stocks led to a decline in the markets. Investors are keenly watching Nvidia’s earnings report and the delayed economic data due this week. Dow Jones Industrial Average futures gained 0.1%, while S&P 500 and Nasdaq 100 added nearly 0.2%, offering stability after the earlier slump.
The Dow lost more than 500 points on Monday, while the Nasdaq 100 and the S&P 500 slipped by under 1%, extending November’s bearish leg after seven months of a winning streak. Nvidia was again the heaviest drag, losing 2% ahead of the Q3 report on Wednesday. The chipmaker remains at the center of the debate about whether the AI-led equity boom has run ahead of fundamentals, is overpriced, and prone to a deeper correction amid massive Big Tech debt issuance and a depreciating cycle of AI hardware.
These doubts are colliding with the narrow market breadth. The sharp fall in the S&P 500 led the benchmark to 3% below its October highs. The index snapped its 139-session streak above the 50-DMA, the second longest of the century. Analysts warn of a deeper pullback amid eroding breadth, following the recent downside. Some market participants still expect a recovery later this week, driven by fundamental factors. Nvidia’s earnings report will reveal whether the AI rally is cooling or only taking a breather. Retail giants such as Target, Home Depot, and Walmart will also release reports, providing investors with a fresh perspective on consumer spending ahead of the holiday season.
Moreover, a wave of delayed economic data will be released after seven weeks of government shutdown. These include employment reports, business surveys, and factory orders. Traders have scaled back their expectations for a Fed rate cut at the December meeting, with the current probability of 40%, as revealed by the CME FedWatch tool, down from 90% a month ago.
Corporate earnings continue to keep the broader landscape balanced as 460 out of 500 companies have beaten estimates, leading the benchmark on track to post the strongest quarter of earnings performance since 2021. Q3 profits are tracking nearly 15% growth, which is twice the earlier forecast.
Despite turbulent markets, equities remain comfortably higher for the year, with the S&P 500 up 14% and the Nasdaq up 18%. Strategists anticipate that even a deeper correction of 5-10% will not hurt the overall yearly gains. Some rotation has already been evident, as healthcare and utilities outperformed on Monday, with investors trimming exposure to high-growth names that surged sharply from April to October.
