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US futures are heading lower as Nvidia’s AI rally shows signs of fatigue

U.S. stock futures traded below the flatline on Friday as a tech-led rally showed real signs of fatigue for the first time in more than a week.

Futures tied to the benchmark S&P 500 (^GSPC) lost about 0.1%, while futures tied to the tech-heavy Nasdaq Composite (^IXIC) fell about the same amount. Futures on the Dow Jones Industrial Average (^DJI) hovered below the flat line.

Thursday’s dip in the S&P 500 and Nasdaq was notable, especially since it has been an anomaly in recent weeks. The S&P flew higher and briefly exceeded the 5,500 mark for the first time on Thursday. The Nasdaq closed a streak of seven consecutive record closes on Thursday.

The AI-powered rally was led by Nvidia (NVDA), which briefly catapulted to the title of world’s most valuable company this week. After a significant loss on Thursday, the stock fell more than 1% in premarket trading on Friday. Other chip stocks, including Broadcom (AVGO), Super Micro Computer (SMCI) and Qualcomm (QCOM), fell along with Nvidia in premarket trading.

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Investors are also assessing the broader health of the U.S. economy and the path for interest rates. Former St. Louis Fed President James Bullard, an inflation hawk, said Thursday that last week’s cool consumer price index could pave the way for a rate cut in September. According to CME’s FedWatch tool, about two-thirds of traders still expect interest rate cuts to occur then.

On the macroeconomic front, S&P Global will release a first reading on US economic activity on Friday morning.

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