U.S. Stock Futures Decline

U.S. stock-index futures moved lower today as investors returned from the holiday weekend in a cautious mood. Earnings reports expected this week will shed light on the health of the consumer and crucial results from AI-darling Nvidia.

Stock-Index Futures Performance

• S&P 500 Futures (ES00): -0.27% decline
• Dow Jones Industrial Average Futures (YM00): -0.15% drop
• Nasdaq 100 Futures (NQ00): -0.41% decrease

On Friday, major indices saw a decline with the Dow Jones Industrial Average falling 145 points, the S&P 500 declining 24 points, and the Nasdaq Composite dropping 131 points. However, the stock market was closed on Monday for Presidents' Day.

Factors Affecting Market Sentiment

News of a $35 billion credit card merger and softness in Treasury yields provided some positivity early Tuesday. Despite potential catalysts in a holiday-shortened week, the market began on a muted note.

Earnings Reports to Watch

Investors are anticipating earnings reports from big retailers like Walmart and Home Depot today, which may offer insights into the confidence of U.S. households. Other companies revealing results include KBR, Medtronic, LGI Homes, Palo Alto Networks, Toll Brothers, Teladoc Health, and Matterport.

Federal Reserve Minutes Release

On Wednesday at 2 p.m. Eastern, the Federal Reserve will release minutes from its January 31 meeting. Traders will closely analyze the guidance to potentially determine the timing of interest rate cuts.

Economic Insights and Market Analysis

Andrew Hollenhorst, economist at Citi, mentioned that the minutes are expected to echo recent Fed speakers in proposing a cautious approach to lowering interest rates this year. The Fed will act only after gaining 'greater confidence' that inflation is consistently trending towards 2%.

Balance Sheet Reduction Details

Hollenhorst also highlighted the significance of any insights into the winding down of balance sheet reduction. A comprehensive discussion on this topic is slated for March, adding to the anticipation surrounding the upcoming Fed minutes.

Nvidia Earnings Report Impact

Nvidia NVDA, -0.06% is scheduled to report its earnings post Wednesday's market closure. The outcome of this report will likely influence broader market sentiment, given the company's status as an AI-chipmaker. The premarket 2% decline in Nvidia shares has already begun to impact S&P 500 and Nasdaq index futures.

Bespoke Investment Group noted Nvidia's impressive year-to-date gain of 50% and its substantial $1.8 trillion market cap, emphasizing the high expectations pinned on the company's upcoming financial results.

Kathleen Brooks, analyst at XTB, echoed these sentiments, underlining the strong anticipation surrounding Nvidia's performance. Any disappointment in the report could potentially disrupt the S&P 500, as the top five stocks in this index have been responsible for 75% of its gains in 2024.

Upcoming U.S. Economic Updates

On Tuesday, the leading economic indicators for January are set for release at 10 a.m. Eastern time. This update will likely provide valuable insights into the current state of the U.S. economy.

Chinese Mortgage Rate Adjustments

Despite Beijing's decision to cut mortgage costs by more than anticipated, there has been a subdued reaction in Chinese stocks. Traders remain cautious, suggesting that additional measures may be necessary to stimulate the world's second-largest economy.