US stock index futures drift lower
US stock index futures drifted lower in early trade on Tuesday. This followed a decent session yesterday, which brought modest gains for the majors across the board.
As things stand, it looks as if this will be yet another positive month for US equities, despite a bit of a scare halfway through September. This came as investors expressed some doubt over the likely return on investment in Artificial Intelligence (AI).
This was brought into sharp focus after NVIDIA announced a $100 billion investment in OpenAI, owner of ChatGPT. That had many people wondering about the circulatory nature of this and similar investments. After all, it looks as if NVIDIA is giving its customers large amounts of cash so that they continue to buy the AI leader’s expensive, yet vital, chips.
Leading chipmakers fell as sellers looked to cut their exposure. But any doubts over the industry were soon set aside when dip buyers rushed in, pushing US stock indices back up towards fresh record highs. While September is often cited as a difficult month for equities, it looks as if that won’t be the case in 2025.
Nevertheless, there’s still a hurdle to jump. A government shutdown, all but confirmed by Vice President JD Vance after President Trump meets with Democrats, now looks certain. The deadline for an agreement is midnight tonight, and while there have been previous shutdowns, with little market reaction, this could be more serious.
There’s a danger that it could lead to permanent job losses running into hundreds of thousands, along with concerns that Friday’s Non-Farm Payroll data may not be released. If so, that runs the risk of the US Federal Reserve running in a vacuum ahead of its next monetary policy meeting at the end of October. This would add another layer of uncertainty ahead of the Fed’s October policy meeting.
It’s also a concern that, should any shutdown be protracted, that could lead to other government economic statistics being delayed. In the meantime, investors may have to rely on other labour market statistics due out this week, including today’s JOLTS Job Openings, tomorrow’s ADP Payroll number and Thursday’s weekly Unemployment Claims update.
So, despite a strong September, risks remain elevated. Market participants are weighing whether record valuations can withstand the dual pressures of weaker labour conditions and the growing threat of a shutdown. The major indexes remain close to record highs, with the S&P 500 is up around 2.7% in September so far. The Dow has added 1.3%, the Nasdaq has climbed 4.7% while the Russell 2000 has added 2.5%.
Source: TN Trader