U.S. stock futures declined on Tuesday, as Wall Street struggled to stabilize following another week of losses. Technology stocks, including heavily sold software shares, led the downturn.
As of the latest update, Dow Jones futures fell 0.4%, S&P 500 futures dropped 0.6%, and Nasdaq futures declined 1.0%.
The CBOE Volatility Index (VIX) rose above the 20 level on Tuesday, reaching 22.50. This indicator, often referred to as Wall Street's "fear gauge," was trading near 17 at the beginning of last week.
U.S. markets were closed on Monday for the Presidents' Day holiday.
In pre-market trading Tuesday, Meta and Nvidia each fell approximately 1%, while Palantir Technologies dropped more than 2%. Memory chip stocks that had posted significant gains this year, such as Micron Technology and SanDisk, also moved lower.
The iShares Expanded Tech-Software Sector ETF (IGV) fell 1% pre-market, extending its 21% decline for the year. The software sector faced pressure due to market concerns that artificial intelligence tools could displace specialized software providers. Autodesk and Salesforce both traded lower before the market open.
The S&P 500 index recorded its second consecutive weekly decline, as fears about AI's disruptive impact affected industries including software, real estate, freight, and financial services. Last week, both the S&P 500 and the blue-chip Dow Jones Industrial Average fell more than 1%, while the tech-heavy Nasdaq Composite Index dropped over 2%.
Daniel Skelly, Head of Market Research and Strategy at Morgan Stanley Wealth Management, stated, "The S&P 500 has been largely flat for the year, with the bull market clearly pausing, replaced by a 'disruption panic' narrative."
Both the Dow and S&P 500 have declined in four of the past five weeks. The Nasdaq recorded its fifth consecutive weekly loss, marking its longest losing streak since 2022.
These concerns overshadowed the latest Consumer Price Index data released last Friday. January's headline CPI figure came in weaker than economists surveyed by Dow Jones had expected. Earlier in the week, non-farm payrolls data had exceeded expectations.
Investors will receive further clues about the inflation trajectory this week: the Personal Consumption Expenditures (PCE) report is scheduled for release on Friday, preceded by the Federal Reserve's meeting minutes on Wednesday.
Palo Alto Networks is set to report earnings after the market closes on Tuesday. Later in the week, DoorDash, Walmart, and Wayfair will also release their financial results.
Iran and the United States held a second round of nuclear talks in Geneva. The talks, mediated by Oman, began around 10:30 AM local time. The previous round in Muscat lasted approximately seven hours, with both sides describing the discussions as "productive."
Iranian officials have expressed willingness to discuss their nuclear enrichment activities but have linked any concessions to potential sanctions relief from the United States. Meanwhile, Washington is strengthening its military presence in the Middle East, deploying a second aircraft carrier to the region amid warnings of potential strikes if negotiations fail to yield a compromise.
According to Goldman Sachs, hedge funds are buying into Asian markets at the fastest pace in a decade. Due to rising optimism about artificial intelligence infrastructure companies, net purchases of emerging and developed Asian markets last week reached the highest level since Goldman began tracking the data in 2016. Exposure to Asian equities has risen to at least its highest level since 2016.
A Bank of America survey indicated that market sentiment remains extremely bullish. However, with nearly all investors positioned for first-quarter gains, further upward movement in asset prices may prove more challenging. Strategists led by Michael Hartnett noted that investor overweight positions in commodities reached a net 28%, the highest since May 2022, while overweight positions in stocks hit a net 48%, the highest since December 2024. Underweight positions in bonds stood at a net 40%, the highest since September 2022, and cash levels saw a slight increase to 3.4% from the previous month's record low of 3.2%.
For stock pickers, this may be a moment of opportunity. Many Wall Street professionals, after reviewing the wave of selling driven by AI anxiety, suggest that indiscriminate selling has deviated from fundamentals, creating buying opportunities.
Gina Bolvin Bernarducci, President of Bolvin Wealth Management Group, stated, "The market is reshuffling, but this is an excellent buying opportunity," adding that she is accumulating tech stocks as valuations retreat. Jonathan Golub, Chief Equity Strategist at Seaport Global, commented, "When you see such completely irrational movement, you want to buy." Jay Hatfield, CEO of Infrastructure Capital Advisors, called the market logic contradictory, suggesting it is creating temporary opportunities. Brian Belski, Founder and Chief Investment Officer of Humilis Investment Strategies, expressed skepticism about AI disruption narratives, emphasizing that stock selection, rather than formulaic approaches, will drive returns.
In individual stock movements, gold mining shares declined pre-market: Newmont fell 3%, Sibanye Stillwater dropped 5.8%, Barrick Gold declined 2.4%, and Harmony Gold fell 4.2%. Spot gold dipped toward $4,860 per ounce, while spot silver fell sharply by 4.58%.
AI application stocks also moved lower: SAP SE fell nearly 3%, Applovin declined almost 2%, and Palantir and Snowflake each dropped more than 1%.
General Mills fell 4.9% after the company lowered its annual sales and profit outlook.
Most popular U.S.-listed Chinese stocks traded higher pre-market: Hesai Group rose nearly 4%, Kingsoft Cloud gained over 3%, and Baidu advanced more than 1%.