HG MARKETS:

Wall Street index futures turned negative during Tuesday’s Asian trading session, reversing earlier gains. The market’s shift to caution was primarily driven by upcoming high-impact events: the scheduled release of Nvidia’s quarterly earnings on Wednesday and the delayed September Nonfarm Payrolls (NFP) report on Thursday. Although Federal Reserve Governor Christopher Waller attempted to reassure markets by suggesting interest rate cuts were necessary to bolster the job market, his comments provided only temporary support as investors continued to shy away from major technology shares, increasingly betting the Fed will hold rates steady in December.

Monday saw significant declines across U.S. equities. The Dow Jones Industrial Average dropped 1.2% to 46,590, the S&P 500 fell 0.9% to 6,672.50, and the NASDAQ Composite lost 0.8% to 22,708.08. The weakness was centered in the technology sector, where investors liquidated positions ahead of Nvidia’s report. Nvidia Corporation itself slipped almost 1.9%, extending recent losses amid questions about the sustainability of its massive AI-fueled valuation gains. Broader industry skepticism about the long-term returns from the hundreds of billions of dollars poured into AI also contributed to the sector’s pullback, with Palantir Technologies falling 1.6%.

An outlier was Alphabet Inc., which surged 3.1% after Warren Buffett’s Berkshire Hathaway revealed a $4.3 billion investment. Anticipation surrounding the potential release of Google’s Gemini 3.0 AI model also boosted Alphabet’s shares. Beyond technology, cyclical sectors experienced declines due to rising global bond yields, which stirred concerns about stretched government fiscal spending and the overall health of the U.S. economy.

The main economic focus this week is on key U.S. data points that were postponed due to the prolonged government shutdown in October. The September NFP figures, due out Thursday, are crucial for gauging the labor market’s strength, a key factor in Fed decision-making. Despite Governor Waller’s advocacy for rate cuts, the likelihood of a December rate reduction is diminishing. The lack of key October inflation and labor data leaves the Fed with limited visibility heading into its December meeting, making a rate pause more probable. Currently, the CME Fedwatch tool places the probability of the Fed holding rates at 59.2%, up from the prior week, with a 40.8% chance of a 25 basis point cut. Additionally, earnings reports from major retailers, including Walmart, Target, and Home Depot, are expected this week.