By Purvi Agarwal and Niket Nishant
Aug 24 (Reuters) – Wall Street futures slipped on Monday as concerns over the U.S. pledge of an “economic D-Day” against Iran kept investors on edge ahead of AI giant Nvidia’s quarterly results and a closely watched inflation report due later this week.
The developments mark a pivotal week for markets that may determine whether equities can resume their climb toward record highs, after latest flare-ups in Middle East tensions interrupted the rally.
The U.S. has said it could roll out economic sanctions targeting Iran’s trade partners, in what it called “the greatest financial offensive ever.”
Treasury Secretary Scott Bessent, who warned of an “economic D-Day” in an opinion piece published in the Financial Times, is scheduled to hold a press conference in the afternoon.
EYES ON WARSH’S JACKSON HOLE SPEECH
Concerns over surging energy prices and ballooning government debt pushed U.S. Treasury yields higher last week, with the 30-year yield touching a 19-year peak before the Treasury announced support measures.
Elevated yields hammered growth-oriented technology stocks, causing Wall Street’s three main indexes to post losses last week.
The turbulence has sharpened focus on Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole symposium later this week, where investors will parse his remarks for clues on policymakers’ reading of the Treasury’s rescue efforts and the latest economic data.
“We no longer know who will ultimately control the long end of the U.S. yield curve: the Treasury, the Fed, or the bond market itself,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“In the wake of last week’s reaction to Treasury’s announcement, the market still has the last word. The Jackson Hole gathering will bring some clarity on how the Fed will fit into this.”
Quarterly results from Nvidia, the world’s most valuable company, are expected to be another key catalyst. Any signs of slowing growth could reignite concerns over stretched valuations and how far the AI-driven rally could run.
Yet, Ozkardeskaya said “stellar results may not guarantee a positive reaction given the souring sentiment around AI heavyweights recently.”
“With strong Q2 earnings already baked into prices, AI financing worries and political/geopolitical headlines are gently taking control of market action.”
Bloomberg News reported on Saturday that some of Nvidia’s largest customers have been told that prices of servers containing its AI chips would rise by more than 15% in many cases.
Trading in megacaps was mixed before the bell on Monday, with Apple up 0.40% and Nvidia down 0.72%. Alphabet dipped 0.40%, while Amazon.com was flat.
Most chipmakers were also lower. Data storage companies Sandisk and Seagate lost 5.35% and 3.95%, respectively.
U.S.-listed shares of Alibaba slipped 2.04% after the Chinese e-commerce giant launched a $10.2 billion share sale at a sharp discount to fund its AI ambitions.
At 07:28 a.m. ET, Dow E-minis were down 128 points, or 0.24%, S&P 500 E-minis were down 21.25 points, or 0.28%, and Nasdaq 100 E-minis were down 200.75 points, or 0.68%.
Meanwhile, traders are fully pricing in one 25-basis-point interest rate hike by the end of 2026, according to LSEG data. A benign inflation report earlier this month, however, reduced chances of an immediate rate hike.
(Reporting by Purvi Agarwal and Niket Nishant in Bengaluru; Editing by Shilpi Majumdar)
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