Stock Index Futures Slip on AI Caution

December S&P 500 E-Mini futures (ESZ25) are down -0.22%, and December Nasdaq 100 E-Mini futures (NQZ25) are down -0.39% this morning, pointing to a lower open on Wall Street after yesterday’s rally amid renewed concerns over the valuations of some of the biggest beneficiaries of the AI boom.

Sentiment weakened as Nvidia (NVDA) fell over -1% in pre-market trading after Japan’s SoftBank Group disclosed it had sold its entire $5.83 billion stake in the chipmaker, reigniting valuation concerns. Separately, CoreWeave (CRWV), which provides rental access to powerful AI chips, slumped more than -9% in pre-market trading after cutting its full-year revenue guidance.

Also adding to the negative sentiment on Tuesday was a Wall Street Journal report stating that China will expedite rare earth export approvals for most firms while excluding those tied to the U.S. military. The move added fresh uncertainty about the durability of the trade truce between the world’s two largest economies.

In yesterday’s trading session, Wall Street’s main stock indexes ended in the green. The Magnificent Seven stocks advanced, with Nvidia (NVDA) climbing over +5% to lead gainers in the Dow and Alphabet (GOOGL) rising more than +4%. Also, chip stocks rallied, with Micron Technology (MU) gaining over +6% and Advanced Micro Devices (AMD) rising more than +4%. In addition, TreeHouse Foods (THS) jumped over +22% after Investindustrial agreed to acquire the food processing company for about $2.9 billion. On the bearish side, health insurance stocks slumped after lawmakers moved closer to ending the shutdown without securing an extension of Affordable Care Act subsidies, with Oscar Health (OSCR) tumbling more than -17% and Centene (CNC) sliding over -8% to lead losers in the S&P 500.

A record 42-day U.S. government shutdown is poised to end as soon as Wednesday after the Senate passed a temporary funding bill, with Democrats providing enough votes to push the measure through. The package now heads to the Republican-controlled House for a final vote before advancing to President Trump’s desk. Once the government reopens, a wave of delayed economic reports is expected to be released, helping to clarify the outlook for interest rates.

“Reopening would not only boost sentiment, but also open the way for data releases, which could provide more insight into the health of the U.S. jobs market and, more broadly, the U.S. economy ahead of next month’s Federal Reserve interest-rate decision,” said Fiona Cincotta at City Index.

Meanwhile, Vail Hartman, Delaney Choi, and Ian Lyngen at BMO Capital Markets noted that it would take several weeks for the market to receive all the data delayed since the start of the shutdown. Jim Reid of Deutsche Bank stated that, based on historical precedent from the 2013 shutdown, September’s jobs report could be one of the first to be released, potentially within three business days of the government’s reopening.

Assuming the government reopens and data collection resumes, Fed officials will still face data compiled through retroactive surveys and other methods—if they are published at all. Analysts cautioned that the Bureau of Labor Statistics would likely be unable to gather and process data for both the October and November CPI reports ahead of the December FOMC meeting. And this comes at a time when the Fed is the most divided in recent memory.

St. Louis Fed President Alberto Musalem said on Monday that he expects the U.S. economy to rebound sharply early next year, emphasizing that policymakers should exercise caution when considering further rate cuts. “It is very important that we tread with caution, because I believe there’s limited room for further reductions without monetary policy becoming overly accommodative,” Musalem said. At the same time, San Francisco Fed President Mary Daly said the economy is likely experiencing a slowdown in demand and cautioned against keeping rates too high for too long. Also, Fed Governor Stephen Miran said that better-than-expected inflation data and continued signs of labor market weakness support the case for a third consecutive rate cut in December.

U.S. rate futures have priced in a 63.6% chance of a 25 basis point rate cut and a 36.4% chance of no rate change at the December FOMC meeting.

The bond market is closed today for the Veterans Day holiday.

The Euro Stoxx 50 Index is up +0.44% this morning, extending gains from the previous session amid further signs that the end of the U.S. government shutdown is near. Consumer stocks outperformed on Tuesday. The ZEW economic research institute reported on Tuesday that German investor sentiment unexpectedly declined in November, amid concerns about the execution of the government’s planned increase in defense and infrastructure spending. “The overall mood is characterised by a fall in confidence in the capacity of Germany’s economic policy to tackle the pressing issues,” said ZEW president Achim Wambach. Separately, data showed that the U.K. labor market weakened further in the third quarter, with easing wage growth and a larger-than-expected increase in the unemployment rate, heightening the likelihood of a Bank of England rate cut in December. Meanwhile, European Central Bank policymakers Frank Elderson and Boris Vujcic said on Tuesday that Eurozone inflation risks are balanced and growth has been stronger than previously anticipated, bolstering market expectations that no further rate cuts are imminent. On the trade front, U.S. President Donald Trump said on Monday he was working with Switzerland on an agreement to reduce the 39% tariff rate applied to its exports. Media reports suggested that the new rate could be 15%. In corporate news, Vodafone Group Plc (VOD.LN) climbed over +3% after the telecom giant reported stronger-than-expected quarterly results and raised its full-year guidance for earnings and cash flow.

U.K. Average Earnings ex Bonus, U.K. Unemployment Rate, Germany’s ZEW Economic Sentiment Index, and Eurozone’s ZEW Economic Sentiment Index were released today.

U.K. Average Earnings ex Bonus stood at 4.6% in the three months to September, in line with expectations.

The U.K. Unemployment Rate was 5.0% in the three months to September, weaker than expectations of 4.9%.

The German November ZEW Economic Sentiment Index came in at 38.5, weaker than expectations of 41.0.

The Eurozone November ZEW Economic Sentiment Index arrived at 25.0, stronger than expectations of 23.5.

Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.39%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.14%.

China’s Shanghai Composite Index closed lower today amid renewed concerns over U.S.-China trade tensions. AI-related stocks retreated on Tuesday. Sentiment weakened after the Wall Street Journal reported that China will expedite rare earth export approvals for most firms while excluding those tied to the U.S. military. This would complicate imports of certain Chinese materials for automotive and aerospace firms that serve both civilian and defense customers. The move added fresh uncertainty about the durability of the trade truce between the world’s two largest economies. Meanwhile, investors are awaiting the country’s October activity data, including retail sales and industrial production, due Friday, which will provide insight into the economy’s momentum at the start of the final quarter of the year. Economists anticipate that the data will likely highlight continued weakness in domestic demand. In other news, an official from the National Energy Administration said on Tuesday that China will ramp up policy support to attract more private investment into the energy sector. In corporate news, XPeng jumped over +17% in Hong Kong after analysts projected that the automaker could achieve profitability sooner than anticipated.

Japan’s Nikkei 225 Stock Index gave up earlier gains and closed lower today as investors decided to take profits following the recent rally. Real estate and industrial stocks underperformed on Tuesday. Hiroki Takei, a strategist at Resona Holdings, said, “With the Nikkei benchmark around all-time highs, it seems like investors’ focus has shifted to profit-taking.” A government survey released on Tuesday showed that sentiment in Japan’s service sector improved in October, reaching its highest level since March 2024 and marking a sixth straight month of improvement. Separately, data showed that Japan’s current account surplus jumped to a record high in September. Meanwhile, Japan’s 30-year government bond auction on Tuesday drew weaker demand than the 12-month average, as renewed concerns over Prime Minister Sanae Takaichi’s fiscal policy prompted investor caution. Takaichi had earlier stated that she intends to use her first stimulus package to jump-start the economy and launch a new growth strategy through investment in key industries. In other news, Japan’s Economic Revitalization Minister Minoru Kiuchi said on Tuesday that a weaker yen could drive up consumer prices through higher import costs. “Regarding the depreciation of the yen, since it could push up consumer prices through higher import costs, we believe it’s important to closely monitor developments,” Kiuchi said. In corporate news, Sony Group climbed over +5% after the electronics and entertainment company posted upbeat quarterly results and raised its full-year guidance. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -4.92% to 32.06.

The Japanese September Current Account n.s.a. stood at 4.483T yen, stronger than expectations of 2.468T yen.

The Japanese October Economy Watchers Current Index came in at 49.1, stronger than expectations of 47.5.

Pre-Market U.S. Stock Movers

Nvidia (NVDA) fell over -1% in pre-market trading after Japan’s SoftBank Group disclosed it had sold its entire $5.83 billion stake in the chipmaker, reigniting concerns about the valuations of some of the biggest beneficiaries of the AI boom.

CoreWeave (CRWV) slumped more than -9% in pre-market trading after the cloud computing firm cut its full-year revenue guidance.

Rigetti Computing (RGTI) slid over -3% in pre-market trading after the quantum computing company posted weaker-than-expected Q3 revenue.

Rocket Lab (RKLB) climbed over +9% in pre-market trading after the space company reported better-than-expected Q3 results and issued solid Q4 revenue guidance.

Paramount Skydance (PSKY) rose more than +4% in pre-market trading after the entertainment company issued above-consensus Q4 revenue guidance.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - November 11th

Sea (SE), Oklo (OKLO), Amdocs (DOX), CAE Inc. (CAE), SFLoration Ltd (SFL), ChipMOS Tech (IMOS), SimilarWeb (SMWB), Beyond Meat (BYND), Endava (DAVA), LightPath (LPTH), Hyliion Holdings (HYLN), Microvision (MVIS), Brainsway (BWAY), Stereotaxis (STXS), Waldencast Acquisition (WALD), Shoulder Innovations (SI), Ceragon (CRNT), Evolution Petroleum (EPM), QuickLogic (QUIK), Xtant Medical (XTNT).