Tech Selloff Pressures US Markets
US stock futures are relatively stable on Tuesday after a sharp decline in major indexes on Monday, driven by a selloff in technology and AI sectors. The S&P 500 and Nasdaq Composite fell 0.5% and 1.21%, respectively, marking their third consecutive day of losses. In contrast, the Dow Jones managed to gain 0.08%.
Among key tech stocks, Palantir, a major defense AI company, saw a steep decline of 10.5%, bringing its total drop to about 30% from its peak. Nvidia also slipped 3.1% ahead of its earnings report on Wednesday, while Microsoft fell 1% amid concerns over slowing data center spending. Apple, however, bucked the trend, rising 0.6% after announcing a $500 billion investment in the US over the next four years, which includes hiring 20,000 new employees.
Tesla Faces Market Headwinds
Tesla stock remains under pressure, with shares down nearly 18% year-to-date. The company is struggling with declining sales in Europe and Britain, which fell 45.2% in January due to increased competition from Chinese automakers and established European manufacturers.
Fed Policy and Inflation Risks
Market direction heavily depends on the Federal Reserve’s rate stance. Analysts suggest that Trump’s potential pro-growth policies could push inflation higher, which may prompt the Fed to delay rate cuts or even consider raising rates. Despite inflation concerns, the broader earnings outlook for US companies remains strong.
Japan’s Market Developments
In Japan, the 10-year government bond yield fell to 1.38%, retreating from 15-year highs as investors sought safe-haven assets amid global economic uncertainty. Weaker US economic data has heightened concerns about growth prospects, while Trump’s tariff plans on Canada and Mexico have fueled further uncertainty. The Bank of Japan is expected to raise interest rates this year after a stronger-than-expected inflation report in Q4.
Conclusion
As investors navigate a volatile market, key focus areas remain the Federal Reserve’s policy decisions, corporate earnings, and upcoming inflation data. While the tech sector faces headwinds, broader economic trends, including global trade policies and central bank decisions, will continue to shape market sentiment in the coming weeks.
