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After AI stocks soared, Nvidia stabilized, and Nasdaq futures rose.

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Tuesday saw a rise in Nasdaq futures as Nvidia and other AI-related firms recovered following a painful selloff. Based on statements made this week by representatives of the US Federal Reserve, investors anticipated more clues on the direction of monetary policy.

Nvidia, a maker of AI chips, increased 2.1% ahead of market opening, indicating a reversal of recent volatility. With gains of more than 1%, other semiconductor firms such as Micron Technology, Broadcom, and Qualcomm also made up some of the ground they had lost. Super Micro Computer, a manufacturer of AI-optimized servers, witnessed a 2% gain.

Since the beginning of the year, there has undoubtedly been a lot of conjecture about Nvidia’s exponential rise, according to senior analyst Ipek Ozkardeskaya of Swissquote Bank. “Sharp selloffs frequently followed strong gains. Although it’s too soon to declare the Nvidia frenzy over, the level of speculation around the company suggests that the price action will first worsen before improving.”

The tech-heavy Nasdaq saw its worst one-day decline since late April, falling over 1% as investors shifted from AI stocks to other industries. This change was part of the reason why the blue-chip Dow reached a one-month high on Monday.

Beginning this week, amid ongoing excitement about AI, investors turned their attention to sectors including consumer staples, energy, and utilities, which have underperformed this year when compared to tech and tech-adjacent companies.

Investors are keeping a close eye on the personal consumption expenditures (PCE) price index data, which is the favored inflation indicator of the Federal Reserve and is scheduled for release on Friday. Market players are also monitoring the consumer confidence data set that will be made public later in the day.

This year’s voting committee members, Fed Board Governors Michelle Bowman and Lisa Cook, are expected to appear on Tuesday. Their comments could shed further light on the future course of monetary policy.

According to LSEG’s FedWatch statistics, market participants anticipate a 61% likelihood of a 25 basis point interest rate decrease in September and are expecting about two cuts by the end of the year.

The day also has a plethora of quarterly company results scheduled. Carnival Corp., a cruise line, is scheduled to report before the market starts, while FedEx, a major package delivery company, will reveal its profits after the bell.

E-mini Dow was down 14 points, or 0.04%, E-mini S&P 500 was up 9.75 points, or 0.18%, and E-mini Nasdaq 100 was up 83 points, or 0.42%, at 5:33 a.m. ET.

Spirit AeroSystems fell 5% along with other significant premarket movers on a story claiming that Boeing had made an offer to purchase the manufacturer of airplane fuselage. The purchase, which is primarily cash-funded, values its principal supplier at around $35 per share.

On the other hand, Trump Media & Technology Group had a 14.2% increase, continuing Monday’s impressive gains. The business declared that it anticipated earning $69.4 million from warrants that were exercised for cash.

Investors are closely monitoring the performance of AI-related stocks and the Fed’s impending decisions as the market processes these developments. While analysts like Ozkardeskaya are hesitant to call an end to the current volatility, the stability of Nvidia and other tech companies might indicate a turning point.

As investors weigh the possibility of more gains in the AI and IT sectors against the larger economic signals from the Federal Reserve’s monetary policy choices, the market’s moves on Tuesday generally indicate a cautious optimism.

What do you think?

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