U.S. equity futures trod water in early trading Monday as investors second-guessed the longevity of the rally that vaulted major averages to three straight winning weeks. Lingering inflation optimism now contends with swirling uncertainty around artificial intelligence and the sudden overhaul of OpenAI’s leadership.
The tech-centric Nasdaq index notched its best performance since June last week after October’s inflation reading sparked hopes that the Fed’s rate hike regime may be nearing an end. This critical data point eased fears of stubbornly persistent inflation that could warrant further aggressive policy tightening.
But the waters were muddied late last week by the surprise departure of OpenAI’s CEO and other top brass. The researcher of cutting-edge AI models like ChatGPT is backed by Microsoft, leaving some market participants concerned about Big Tech’s ability to monetize these emerging technologies.
Hopes remain high headed into the holiday-shortened week that cooling prices could fuel a late-year stock surge, though questions around the AI landscape introduce new variables. Nvidia’s quarterly report Tuesday may provide more clarity on the sector’s near-term trajectory. The chipmaker has ridden the AI wave this year, though its premium valuation leaves little room for error.
After recent gains, the market appears sensitive to new uncertainty on the inflation and tech fronts. While history favors further upside into year-end, stocks may struggle for direction in the coming days as investors reassess the fluid landscape.
