Stock market futures traded lower Tuesday morning as investors continued to grapple with concerns about artificial intelligence potentially disrupting traditional business operations, following the Presidents Day holiday weekend.
Fears about AI’s impact on established companies triggered significant selling in software, brokerage, and transportation stocks last week, leading to the worst weekly performance for major market indices since mid-November.
“AI adoption is an overall positive rather than a negative, but it would change the business models of some industries. We continue to see the AI disruption trade as a rotation theme, rather than a risk-off,” explained Mohit Kumar, an economist with Jefferies.
Adding to market anxiety, Chinese technology giant Alibaba introduced its latest artificial intelligence system called Qwen 3.5 on Monday, which can handle sophisticated tasks independently. Despite the broader concerns, Alibaba’s American-traded shares climbed 0.8% in early trading Tuesday.
Major technology stocks faced pressure, with Nvidia dropping 0.9%, Microsoft declining 0.5%, and Alphabet falling 1.4% in premarket activity.
Meanwhile, geopolitical tensions remained in focus as Iran’s top leader dismissed U.S. efforts to overthrow his regime while both countries engaged in indirect nuclear negotiations in Geneva.
As of 7:24 a.m. Eastern Time, Dow futures had fallen 64 points or 0.13%, S&P 500 futures dropped 21.25 points or 0.31%, and Nasdaq 100 futures decreased 178.25 points or 0.72%.
Market participants are eagerly awaiting this week’s personal consumption expenditure data, which serves as the Federal Reserve’s primary inflation measurement and could influence future interest rate decisions.
Last week’s inflation report showed cooler-than-anticipated price increases, slightly boosting expectations for potential rate cuts this year.
Market pricing now suggests a 52% probability of a quarter-point rate reduction in June, up from approximately 49% chances a week earlier, based on CME’s FedWatch Tool data.
The current earnings season is nearing completion, with over 73% of S&P 500 companies having reported quarterly results. Notably, 74.5% exceeded analyst expectations, compared to the typical 67% beat rate, according to LSEG information released Friday.
Investors will closely monitor remarks from Federal Reserve Governor Michael Barr and San Francisco Fed President Mary Daly scheduled for later Tuesday.
In corporate developments, Warner Bros turned down Paramount’s updated acquisition proposal, providing the studio one week to present improved terms. Both entertainment companies saw their shares rise 2.7%.
Norwegian Cruise Line shares jumped 8% in early trading after reports that activist investor Elliott has accumulated more than a 10% ownership position in the cruise company.
Zim Integrated Shipping’s U.S.-listed shares soared approximately 35% following news that Germany’s Hapag-Lloyd will purchase the company for $4.2 billion.
Payment processor Fiserv gained nearly 5% after reports indicated activist investor Jana Partners has acquired a stake in the firm.
Medical device maker Masimo surged about 34% on reports that Danaher is nearing a roughly $10 billion acquisition deal for the pulse-oximeter manufacturer. Danaher shares fell 7% on the news.
Looking ahead, investors are also monitoring Friday’s Supreme Court opinion day, when the court may announce its decision regarding President Trump’s trade tariff policies.
