Concerns over artificial intelligence impacting business models sparked a selloff in software firms, brokerages and trucking companies the previous week, causing Wall Street’s three main indexes to log their steepest weekly decline 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,” said Mohit Kumar, economist at Jefferies.
Potential risks from Chinese AI players also added to the uncertainty. On Monday, Alibaba unveiled a new AI model, Qwen 3.5, designed to independently execute complex tasks. Its US-listed shares rose 0.8% in premarket trading on Tuesday.
Most US tech stocks were lower on the day, with Nvidia losing 0.9%, while Microsoft and Alphabet inched down 0.5% and 1.4%, respectively.
Iran’s supreme leader said US attempts to depose his government would fail, as the two nations began indirect talks in Geneva over a long-running nuclear dispute.
At 07:24am ET, Dow E-minis lost 64 points, or 0.13%, S&P 500 E-minis shed 21.25 points, or 0.31%, and Nasdaq 100 E-minis fell 178.25 points, or 0.72%.
This week, the personal consumption expenditure report – the US Federal Reserve’s preferred inflation gauge – will be closely watched for insight into inflation and could impact the central bank’s rate-cut trajectory.
The dataset follows a cooler-than-expected consumer inflation reading last week that slightly raised bets on interest-rate cuts this year.
Traders are pricing in a 25-basis-point reduction in June, with the odds at 52%, compared with a close-to-49% chance a week ago, according to CME’s FedWatch Tool.
Corporate earnings are in the final lap of the earnings season. Of the over 73% of S&P 500 companies that have reported earnings this quarter, 74.5% posted results above analysts’ estimates compared to 67% in a typical quarter, LSEG data showed on Friday.
Markets will parse comments from Fed Governor Michael Barr and San Francisco President Mary Daly later in the day.
Warner Bros rejected Paramount’s revised takeover bid, giving the studio a week to negotiate a better deal. Both companies rose 2.7% each.
In other movers, Norwegian Cruise Line jumped 8% in premarket trading after the Wall Street Journal reported activist investor Elliott has built a more than 10% stake in the cruise operator.
US-listed shares of Zim Integrated Shipping soared about 35% after Germany’s Hapag-LLoyd agreed to buy the company for US$4.2 billion.
Fiserv’s shares gained almost 5% after WSJ reported activist investor Jana Partners has taken a stake in the payments company.
Masimo surged about 34% after a report said Danaher was closing in on a nearly US$10 billion deal to acquire the pulse-oximeter maker. Danaher lost 7%.
Investors will also watch for the US Supreme Court’s next opinion day on Friday, when a verdict on President Donald Trump’s trade tariffs could be announced.