U.S. equity futures traded cautiously on Tuesday as investors prepared for a fresh batch of economic data and corporate earnings in a shortened trading week. The ongoing shift away from high-growth technology names toward defensive sectors remains a central theme, amid renewed debate over whether heavy artificial intelligence spending will translate into sustainable returns. Meanwhile, Brent crude slipped ahead of scheduled U.S.–Iran talks in Switzerland, and gold prices pulled back. Cybersecurity company Palo Alto Networks (NASDAQ:PANW) is set to report after the closing bell.
Futures trade near flatline
As of 03:04 ET, Dow futures were down 26 points, or 0.1%. S&P 500 futures declined 11 points, or 0.2%, while Nasdaq 100 futures fell 99 points, or 0.4%. U.S. markets were closed Monday for a public holiday, shortening the trading week.
Wall Street finished last Friday mixed. Investors weighed concerns about the competitive impact of newly launched AI models across multiple industries, alongside questions about whether continued large-scale AI infrastructure investments will deliver meaningful payoffs for mega-cap technology firms.
At the same time, traders assessed data showing U.S. headline inflation eased more than expected in January. The softer reading reinforced expectations that the Federal Reserve could move sooner rather than later on its next rate cut, following last month’s pause in its easing cycle.
Against this backdrop, the Nasdaq Composite edged down 0.2%, while the S&P 500 and Dow Jones Industrial Average posted modest gains.
Crude eases before diplomatic talks
Oil markets softened with attention fixed on upcoming negotiations between U.S. and Iranian officials in Geneva.
A firmer dollar ahead of key macroeconomic releases and signals from Federal Reserve policymakers this week also weighed on crude.
Brent futures for April delivery slipped 0.7% to $68.13 per barrel. West Texas Intermediate futures rose 0.6% to $63.11 per barrel at 03:06 ET, with price action influenced by the prior U.S. holiday.
According to media reports, U.S. and Iranian representatives are scheduled to meet in Switzerland to address Tehran’s nuclear enrichment program. The discussions come amid elevated geopolitical tensions in the Middle East, as Washington increases its military presence in the region. President Donald Trump has repeatedly warned that military action remains an option if Iran declines to accept U.S. terms.
Trading activity was also muted due to Lunar New Year holidays across several Asian markets, including China, Hong Kong, Taiwan, South Korea and Singapore.
Precious metals pull back
Gold and silver retreated as investors looked ahead to a slate of U.S. economic releases.
At 03:09 ET, spot gold fell 1.4% to $4,919.72 per ounce, while April gold futures dropped 2.2% to $4,941.74 per ounce.
Spot silver declined 2.0% to $75.0925 per ounce, while platinum gained 0.2% to $2,024.79 per ounce.
Precious metals have experienced sharp volatility in recent weeks, with gold and silver still trading below their late-January highs.
Attention now turns to U.S. industrial production data due Wednesday and the PCE price index — one of the Fed’s preferred inflation gauges — scheduled for Friday. Markets are also awaiting minutes from the Fed’s January meeting, when policymakers kept rates steady at a range of 3.5% to 3.75%.
Palo Alto Networks results ahead
Investors will closely monitor Palo Alto Networks’ earnings for further clarity on how technology firms are navigating intensified competition from newly released AI models.
The California-based cybersecurity company raised its full-year revenue and profit outlook in November, citing rising demand for digital security solutions as cyber threats escalate.
It also announced a $3.35 billion acquisition of cloud monitoring firm Chronosphere, which will be integrated into its Cortex AgentiX platform. The integration is expected to allow Palo Alto’s AI-driven systems to leverage Chronosphere’s data to detect performance bottlenecks and identify root causes.
Together with a separate acquisition of identity security specialist CyberArk Software, the Chronosphere deal is projected to close in the second half of Palo Alto’s fiscal 2026.
Nikkei extends decline on weak GDP
Japan’s Nikkei index fell again, extending losses after data revealed that fourth-quarter economic growth undershot expectations.
Official figures showed Japan’s GDP expanded at an annualized rate of 0.2% in the October–December quarter, far below forecasts of 1.6%. However, the result marked a rebound from the previous quarter’s 2.6% contraction.
The data highlight the economic challenges facing Prime Minister Sanae Takaichi’s administration following its recent electoral victory. Although the government has signaled plans for stimulus measures to support growth, persistent cost-of-living pressures continue to dampen domestic demand.
Meanwhile, the Bank of Japan remains focused on managing sticky inflation and currency weakness. Policymakers have indicated they intend to continue gradually tightening policy after years of ultra-loose monetary conditions.
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