U.S. stock futures pointed to additional weakness early Tuesday, suggesting that the market may extend the sharp selloff seen at the start of the week. Persistent pressure on high-growth technology names — especially Nvidia — continued to weigh heavily on sentiment, overshadowing modest gains in defensive sectors.
Futures tied to the Dow, S&P 500, and Nasdaq all traded in negative territory, indicating another cautious open as traders reassessed valuations across the market.
Nvidia at the center of renewed volatility
The latest downturn has been driven largely by renewed selling in tech mega-caps. Nvidia (NASDAQ:NVDA), once the undisputed engine of the artificial-intelligence boom, slipped further in pre-market trading after Monday’s steep drop. Investors appear increasingly anxious ahead of the company’s highly anticipated quarterly earnings report due after the close on Wednesday.
Because Nvidia has been the market’s key bellwether for AI-related enthusiasm, Wednesday’s results are being treated as a critical test. With analysts and investors questioning whether AI-linked spending can continue at its breakneck pace, any sign of hesitation from the company could have far-reaching effects across the tech sector — and potentially the broader market.
Alphabet (NASDAQ:GOOG) CEO Sundar Pichai added fuel to the debate during an interview with the BBC, remarking that there is a degree of “irrationality” in the current AI wave and cautioning that “no company is going to be immune” if the boom deflates. His comments reinforced broader concerns about stretched valuations within the sector.
Government shutdown delays leave investors starved of data
Another factor clouding market visibility has been the temporary blackout of key U.S. economic indicators caused by the recent government shutdown. With official releases delayed for weeks, policymakers and investors have had limited real-time insight into the strength of the labor market and the wider economy.
Some data has now started to resurface. On Monday, the Commerce Department unexpectedly reported a modest increase in August construction spending — a rare bright spot in an otherwise uncertain landscape. Still, the report covers a period long before the shutdown, limiting its usefulness.
The most important piece of delayed data — the September nonfarm payrolls report — is set to be released on Thursday and is widely expected to shape expectations for the Federal Reserve’s December meeting. Markets remain split on whether the Fed will cut rates this year or wait for stronger evidence of cooling economic conditions.
Monday’s selloff highlights growing fragility
Monday’s session was marked by a sharp and broad retreat across risk assets. All three major averages sank to their lowest closing levels in about a month after an early attempt at direction gave way to steady selling throughout the afternoon.
Although the indices staged a mild rebound just before the closing bell, the declines were still notable:
- Dow Jones Industrial Average: –557 points (–1.2%)
- Nasdaq Composite: –192 points (–0.8%)
- S&P 500: –62 points (–0.9%)
The slump highlighted growing investor unease about the sustainability of equity valuations — especially in tech — at a time when interest rates remain elevated and economic signals mixed.
Sector breakdown: airlines, banks, housing lead the declines
Several major sectors experienced heavy losses Monday, underscoring the breadth of the downturn:
- Airlines were among the worst performers, with the NYSE Arca Airline Index falling 3.7% to its lowest close in more than three months as fuel costs, slowing travel demand, and recession fears converged.
- Financials struggled as bond-market volatility pressured lenders and brokerages alike. The KBW Bank Index and the NYSE Arca Broker/Dealer Index both posted declines exceeding 2.5%.
- Housing stocks dropped 2.7%, reflecting ongoing softness in the real-estate market as high mortgage rates continue to choke affordability.
- Semiconductors, energy, and networking stocks also pulled back sharply as investors rotated away from cyclical and growth-sensitive areas.
- Utilities, often considered a haven during periods of volatility, were one of the few sectors to show modest strength.
Looking ahead
With Nvidia’s earnings looming and delayed economic data beginning to filter back into the market, traders are preparing for a potentially volatile stretch. The combination of elevated valuations, policy uncertainty, and shifting expectations for AI-driven growth has created a fragile environment where even small surprises can lead to outsized market reactions.
For now, futures suggest the path of least resistance remains to the downside — unless incoming data or Nvidia’s update on Wednesday offers a compelling reason for investors to step back in.
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