Following a pullback in last Friday's trading session, stock markets are poised for a further decline as trading commences on Monday. Current futures for major indices indicate a significant drop, with S&P 500 futures down 2.1%.
A significant sell-off in technology stocks, particularly Nvidia (NVDA), is set to impact Wall Street adversely, as the tech giant's shares plummet by 11.5% in pre-market trading. Nvidia's decline follows the news that the Chinese startup DeepSeek's AI Assistant has surpassed ChatGPT to become the highest-rated free app on Apple's App Store in the U.S. This development casts doubts on Silicon Valley's substantial investments in AI and the enduring dominance of U.S. technology in this field.
Adding to these pressures are concerns about interest rate trajectories, ahead of next week's Federal Reserve monetary policy meeting. While most anticipate that the Fed will hold interest rates steady, market participants will scrutinize the accompanying statement for insights into future rate adjustments.
Recent economic indicators have spurred worries that the Fed might maintain rates unchanged for an extended period, yet numerous economists still predict rate cuts in the first half of the year. According to the CME Group's FedWatch Tool, there is currently a 78% probability that rates will decrease by at least a quarter point after the Fed's June meeting.
On Friday, stocks initially displayed a lackluster performance but trended lower as the trading session progressed. The major indices moved downward, with the S&P 500 retreating after previously hitting a new record intraday high. Although the major averages bounced back from their lows by the closing bell, they remained in negative territory. The Dow decreased by 148.82 points or 0.3% to 44,424.25, the Nasdaq dropped by 99.38 points or 0.5% to 19,954.30, and the S&P 500 fell by 17.37 points or 0.3% to 6,101.24.
Despite the day's downturn, the major indices recorded robust gains over the holiday-shortened week, with the Dow advancing 2.2%, and both the Nasdaq and S&P 500 rising by 1.7%.
In Asian markets, trading on Monday showed a mixed performance. Japan’s Nikkei 225 Index slipped by 0.9%, while Hong Kong’s Hang Seng Index rose by 0.7%.
Conversely, European markets saw a downward movement. The German DAX Index decreased by 0.8%, the French CAC 40 Index fell by 0.5%, and the UK's FTSE 100 Index declined by 0.2%.
In commodities, crude oil futures are down $0.46 to $74.20 per barrel, following a slight increase of $0.04 to $74.66 per barrel last Friday. Meanwhile, gold futures have dropped by $17 to $2,761.90 per ounce, following a rise of $13.90 to $2,778.90 in the prior session.
Regarding currencies, the U.S. dollar is trading at 154.25 yen, compared to 155.98 yen at the close of trading in New York on Friday. It’s also trading at $1.0523 per euro, up from last Friday's $1.0497.
