U.S. stock index futures remained broadly stable in the previous trading session following a strong rally on Wall Street, led by technology and semiconductor stocks. The recovery came after a sharp selloff last week, driven by concerns over the sustainability of artificial intelligence spending and the potential implications of the U.S. midterm election results. S&P 500 futures rose to 7,581 points, while Nasdaq 100 futures advanced to 28,060 points and Dow Jones futures climbed to 52,534 points.
Major U.S. stock indexes ended the regular session with substantial gains, as the Dow Jones Industrial Average rose 2.2%, while the S&P 500 advanced 2.4%, recording its strongest daily performance since April 8. The Nasdaq Composite jumped 2.7%, supported by a recovery in technology stocks. Semiconductor companies led the rally, with the Philadelphia Semiconductor Index surging nearly 7%. Advanced Micro Devices shares gained more than 13%, while Broadcom climbed 8.8%. Nvidia moved against the broader market trend, falling 4.2% to its lowest closing level since April 7, amid reports of an investigation into whether CEO Jensen Huang had been targeted by a foreign intelligence operation.
Despite the strong recovery, major financial institutions remain cautious about declaring an end to the recent correction in U.S. equities. JPMorgan, Morgan Stanley, and RBC Capital Markets suggested that the market downturn may be approaching its final stages, although further volatility cannot be ruled out. Lori Calvasina, equity strategist at RBC Capital Markets, believes that current investor sentiment and valuation indicators support the possibility of market stabilization. The AAII investor sentiment survey showed that the four week average difference between bullish and bearish investors had reached levels historically followed by average stock market gains of 11% over the subsequent 12 months. However, Calvasina emphasized that stabilization in corporate earnings expectations remains essential for supporting higher equity valuations.
Meanwhile, Michael Wilson, chief equity strategist at Morgan Stanley, identified the 7,100 to 7,300 point range as a potential downside target for the S&P 500. He expects a retest of recent lows could create favorable conditions for a rally toward the end of the year, while favoring high quality cyclical stocks benefiting from improving earnings revisions. Wilson also noted that data center spending could account for approximately 5% of total S&P 500 company revenues in 2027, potentially limiting the direct impact of delays in sector projects on the index’s overall revenue performance.
In currency markets, the U.S. Dollar Index declined to 101.68 points today, surrendering part of its strong gains recorded at the end of last week. The pullback followed employment data showing that the U.S. economy added 165,000 nonfarm payroll jobs, significantly exceeding market expectations of 65,000. Employment figures for August and September were revised upward by a combined 84,000 jobs, while the unemployment rate declined to 4.1% from 4.2%. The strength of the labor market reinforced expectations that the Federal Reserve could maintain a restrictive monetary policy stance, particularly as inflation remains above its 2% target.
Investors are awaiting the release of the October Consumer Price Index on Tuesday, followed by the Producer Price Index on Friday, to assess the likelihood of another interest rate increase at the Federal Reserve’s December meeting. According to CME FedWatch data, markets were pricing in an 84% probability of a 25 basis point rate hike. Meanwhile, major currencies benefited from the dollar’s retreat, with the euro rising to $1.1224 and the Japanese yen strengthening to 157.95 against the dollar. The euro’s outlook remains tied to European economic growth figures and European Central Bank policy expectations, while the yen continues to respond to changes in U.S. interest rate yields and the monetary policy gap between Washington and Tokyo.
The recovery in U.S. equities coincided with a decline in oil prices after President Donald Trump indicated that additional military strikes against Iran were becoming less likely as diplomatic efforts to end the conflict continued. Lower oil prices helped ease concerns about rising energy costs and their potential impact on inflation. At the same time, the U.S. midterm election results raised questions about the future of artificial intelligence investment, particularly amid the possibility of new regulatory restrictions on data center development.
Thierry Wizman, global foreign exchange and interest rates strategist at Macquarie, believes that these potential restrictions could affect up to half of the planned expansion in U.S. data center capacity during 2027, potentially weighing on economic growth and limiting further gains in the dollar. Investors are also monitoring upcoming earnings reports from CoreWeave, Cisco Systems, and Applied Materials to assess the strength of demand for artificial intelligence infrastructure. Inflation figures, interest rate expectations, and corporate earnings will remain central to determining whether U.S. equities can extend their recovery or return to test the support levels established during the recent market correction.
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