U.S. stock futures showed a mixed tone Friday as traders recalibrated expectations for a December Federal Reserve rate cut, keeping pressure on the tech sector. At 05:00 ET (10:00 GMT), Dow Jones futures rose 0.3%, while S&P 500 futures dipped 0.1% and Nasdaq 100 futures fell 0.5%, down 115 points.
All major indexes are on track for a losing week after Thursday’s sharp selloff. The S&P 500 is down 2.9%, the Dow nearly 3%, and the Nasdaq Composite has dropped 3.6%. Stronger-than-expected September job growth, reported late due to prior government shutdown delays, reinforced the view that the Fed is unlikely to cut rates next month.
Earlier optimism driven by Nvidia’s robust third-quarter results faded quickly. Strong demand from artificial intelligence continued to lift the chip giant, yet the broader market remained unsettled as traders reassessed both valuations and interest-rate risks.
AI Valuations Under Fresh Scrutiny
The conversation on Wall Street is increasingly centered on whether AI-linked stocks have run too far, too fast. Nvidia’s upbeat earnings were not enough to dispel broader concerns about overheating in the sector.
Key pressures shaping sentiment include:
- Investor Michael Burry’s warning that AI demand is overstated
- Fears of an emerging AI valuation bubble
- Market sensitivity to interest-rate expectations
- Comparisons to the dot-com era, though analysts at Capital Economics argue any correction would be “smaller and shorter-lived”
Rate expectations continue to shift. Markets now price just a 31% chance of a 25-basis-point cut in December, down from 45.8% last week, according to CME FedWatch. Minutes from the Fed’s October meeting showed policymakers divided over a near-term move.
Investors will study S&P PMI data and final November consumer-sentiment readings later Friday for clues on household and business momentum.
Retail Earnings and Oil Weakness
Retailers are back in focus as the sector rolls out new results. BJ’s Wholesale Club reports before the opening bell, adding to a busy earnings week. Shares of Gap rose premarket after the clothing retailer exceeded expectations for comparable sales in the third quarter, led by strong demand at Old Navy and Banana Republic. Ross Stores also advanced after delivering earnings above Wall Street forecasts, boosted by a solid back-to-school season.
Oil markets extended losses as traders weighed U.S. efforts to broker a Russia-Ukraine peace deal that could reshape supply dynamics. Brent fell 1.9% to $62.17, while WTI slipped 2.2% to $57.72, with both benchmarks set for weekly declines above 3%. A potential agreement, if realized, would remove much of the geopolitical risk premium embedded in crude prices.