Key facts
- S&P 500 futures were muted on Tuesday ahead of earnings from major US banks.
- Weakness in chip stocks weighed on Nasdaq futures.
- JPMorgan Chase, Wells Fargo, Goldman Sachs, and Citigroup are scheduled to report third-quarter results.
- S&P 500 earnings for the July-September quarter are expected to grow 30.6%.
- US chipmakers including Nvidia, AMD, Marvell Technology, Micron Technology, Western Digital, Seagate, and Sandisk saw declines in premarket trading.
- Broadcom CEO Hock Tan noted capital as a constraint for AI development.
S&P 500 futures showed little movement on Tuesday as investors awaited earnings reports from major US banks, while a downturn in chip stocks weighed on Nasdaq futures. Hopes for a strong earnings season have recently supported the broader US equity market, despite geopolitical concerns, rising government bond yields, and inflation worries.
Top lenders JPMorgan Chase, Wells Fargo, Goldman Sachs, and Citigroup are scheduled to release their third-quarter results before the market opens. Their shares saw modest gains in premarket trading, rising between 0.4% and 1.4%.
Overall S&P 500 earnings for the July-September quarter are projected to increase by 30.6%, with technology and energy sectors expected to lead the gains, according to data compiled by LSEG.
US chipmakers continued to face pressure following a selloff on Monday. Nvidia fell 0.5%, while AMD and Marvell Technology eased 1.2% and 2.4%, respectively. Memory chipmaker Micron Technology dipped 2.8%, and data storage companies Western Digital, Seagate, and Sandisk dropped between 3.5% and 4.5% each.
Nic Puckrin, cross-asset analyst and founder of Coin Bureau, cited potential competition from China's CXMT as a concern for chipmakers, noting that "This is why we're seeing such violent moves in the South Korean stock market, but US chipmakers also aren't immune." Broadcom CEO Hock Tan stated on Monday that capital would be the biggest constraint for the company amid continued AI development, likening some investment flows into the sector to "casino gambling."
Meanwhile, oil prices declined as traders assessed supply risks from attacks on Saudi Arabia and considered the possibility of increased diesel supplies from Russia. Concerns over energy-related inflation globally, driven by rising crude oil prices due to US-Iran conflict, have prompted central banks to adopt a stricter monetary policy stance.
Upcoming US consumer and producer price data for September, along with retail sales figures, are expected later this week to provide further insight into inflation trends and influence expectations for future monetary policy. Traders widely anticipate the Federal Reserve will maintain current interest rates this month, though a December hike remains a possibility, according to CME FedWatch.
US Federal Reserve Governor Christopher Waller commented that the recent increase in US bond yields is attributable to stronger economic growth and significant investment in AI, rather than higher inflation expectations, which he described as "well anchored."