Futures Show Mixed Trends – What’s Next for Wall Street?

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•  28 Feb 2025
 

Stock futures are showing mixed movement as the market prepares to open. If there are no significant rebounds today, major indices are set to close the week in the red. So far, the S&P 500 has dropped approximately 4.2%, while the Nasdaq has tumbled 6.9% this week. Since the start of the month, the S&P 500 has lost 1.9%, and the Nasdaq is down 2.5%—a month marked by a wave of corporate earnings reports, including those from major tech giants.

At the end of January, Apple ($AAPL), Meta ($META), and Microsoft ($MSFT) released their earnings, followed by Google ($GOOGL) and Amazon ($AMZN) shortly after. Apple’s results disappointed investors once again, with weak iPhone sales, while the rest of the tech giants continued to emphasize artificial intelligence (AI) as their primary growth driver. However, cloud revenues from Microsoft, Amazon, and Google fell short of expectations, raising concerns despite continued investment from these firms.

For some time now, investors have been wary of a potential slowdown in AI chip demand and technology sector investments. While major tech companies are still pouring resources into AI and semiconductor development, the returns on these investments are not yet evident—fueling uncertainty in the market.

This concern was underscored by Nvidia ($NVDA) earnings report this week. While the company posted another strong quarter and delivered solid guidance, it may not have been enough to reassure investors. Nvidia’s profit margins continue to face pressure, with the company forecasting further compression in Q4 2024. Although maintaining gross margins above 70% is a challenge, investors—who have grown accustomed to Nvidia’s blockbuster results—found the outlook concerning. Despite management’s reassurances that demand remains strong, Nvidia’s stock plunged 8.5% in yesterday’s trading session, its first after reporting earnings.

The big question now is whether we are witnessing the start of a real slowdown in AI-related growth or just a temporary setback. Market sentiment remains fragile, and traders are on edge, ready to sell at the first sign of bad news. Adding to the uncertainty is the political landscape, with investors increasingly anxious about Donald Trump’s policies and his handling of global affairs.

As Wall Street navigates these uncertainties, all eyes remain on the future of AI investments, semiconductor demand, and economic policy shifts—factors that could shape the market’s next major move.