US stock futures traded mixed early Monday to start the last week of another successful quarter on Wall Street. Futures tied to the benchmark S&P 500 were up around 0.1%, while those on the tech-heavy Nasdaq Composite hovered just below the flatline. Dow Jones Industrial Average futures rose 0.3%.
Stocks are hoping to add a punchline to what’s been a high-flying quarter thus far. The S&P 500 is up around 4.5% this quarter, and the Nasdaq has surged around 8% on the back of an AI-driven rally.
However, the rally showed signs of fatigue to end last week. Nvidia, the darling of Wall Street in 2024, lost ground after reaching fresh all-time highs toward the end of the week. Those losses looked set to continue early Monday, with the stock down around 2% in premarket trading.
On the macroeconomic front, as well as renewed focus on the US political scene, could grab more of the spotlight this week. US President Joe Biden and presumptive Republican nominee Donald Trump are set for their first debate Thursday evening. Inflation will also be in focus, with the release of the Personal Consumption Expenditures (PCE) index on Friday morning.
Economists expect core PCE to have risen just 0.1% last month, which would be the slowest monthly rise since last November. This positive data could ease Fed policymakers’ concerns about rate cuts this year, with traders expecting the Fed to begin cuts in September.
In the midst of all this, the question arises: Is Nvidia just too rich from a valuation perspective compared to other strong tech titans like Microsoft and Apple? Nvidia shares trade at over 21x forward sales, a significant premium over Microsoft at 12x and Apple at 8x. This raises concerns about the sustainability of Nvidia’s current valuation.
As the week unfolds, investors will be closely watching how these factors play out in the market and how they could impact the ongoing success of the quarter on Wall Street.
