Stock futures displayed minimal movement Tuesday night as investors adjusted their positions following a notable sell-off in technology stocks. Futures associated with the Dow Jones Industrial Average saw a slight gain of 3 points, translating to an increase of 0.01%. Both S&P futures and Nasdaq 100 futures recorded modest upticks of less than 0.1%.
The trading session on Tuesday highlighted a significant divergence in market performance. The Dow Jones Industrial Average surged by more than 550 points, closing at a record high, while the Nasdaq Composite experienced a downward slide. Meanwhile, the S&P 500 marked its third consecutive positive day, closing higher as well.
Consumer stocks, including major players like Walmart, Home Depot, and McDonald’s, significantly supported the Dow’s climb, as investors shifted their focus to sectors perceived to have lower valuations and reduced exposure to the booming artificial intelligence sector. The health care sector emerged as the top performer, buoyed by gains in companies such as Eli Lilly and Johnson & Johnson.
Conversely, popular AI-related stocks like Nvidia faced declines, underscoring the cautious sentiment among investors regarding tech valuations following their recent ascents. Conversations surrounding a potential stock market bubble persisted, with investors increasingly discerning which tech giants are best positioned in the competitive AI landscape.
Craig Johnson, chief market technician at Piper Sandler, remarked on CNBC’s “Power Lunch,” highlighting the narrowing range of stocks achieving new highs and how few are sustaining positions above critical moving averages. He noted, “When you have very few groups making new highs, very few stocks remaining above their 200-day moving average or 40-day moving average … it’s a very interesting rotation. What hasn’t been working is a place to go hide right now.”
In addition, market participants were grappling with a new report from ADP, revealing that private employers had reduced payrolls in October. This development added to prevailing concerns regarding the weakening labor market. The report drew heightened attention in light of the ongoing U.S. government shutdown, which has suspended numerous vital economic releases. However, optimism about a potential resolution is emerging, as the Senate recently passed a spending bill that is now pending a final vote in the House of Representatives. The government could reopen as soon as the end of this week.
