U.S. index futures declined Tuesday after a tech sector selloff led the S&P 500 and Nasdaq to their second consecutive day of losses, driven by concerns over AI demand and chip stocks like Seagate and Micron. Geopolitical tensions eased with President Trump postponing an attack on Iran, while investors anticipate key earnings from Home Depot and others, alongside rising mortgage rates and warnings from Bank of America about tech layoffs dampening economic growth.
U.S. index futures experienced a downturn Tuesday morning, following a significant sell-off in technology stocks during the previous session.
Futures tracking the S&P 500 slipped by 0.23%, while Nasdaq 100 futures saw a larger drop of 0.46%. Dow Jones Industrial Average futures also shed 58 points, translating to a 0.12% decline.
Both the benchmark S&P 500 and the tech-heavy Nasdaq Composite recorded their second consecutive day of losses on Monday, with the broad market index down 0.07% and the Nasdaq closing 0.51% lower. In contrast, the blue-chip Dow bucked the trend, gaining 159.95 points, or 0.32%.
A notable segment of Monday's sell-off involved memory chip stocks. Seagate shares tumbled almost 7% after CEO Dave Mosley's remarks at a JPMorgan conference sparked fears that the company might struggle to meet the escalating demand driven by artificial intelligence. Mosley indicated that constructing new factories "would just take too long." Peer company Micron Technology also saw its stock fall nearly 6% in sympathy, with other AI-related stocks also experiencing declines.
These recent losses come after a period of strong market performance, with both the S&P 500 and Nasdaq reaching fresh record highs last week, and the Dow briefly touching the 50,000 level. However, Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research, suggested that the market's most significant rallying days might be behind it. "From a positioning standpoint and how stretched things have gotten, probably means that you don't see as sharp of the rallies that we were seeing certainly off the throes of the low in March," he stated on CNBC's "Closing Bell: Overtime" on Monday afternoon.
In geopolitical news, President Donald Trump announced in a Monday Truth Social post that he was calling off a planned attack on Iran for Tuesday after leaders from three Middle Eastern regional powers requested a delay.
Looking ahead, Home Depot, Eagle Materials, and Amer Sports are scheduled to report earnings before Tuesday's market open. Traders will also be monitoring April's pending home sales data.
Asia markets broadly higher amid slightly eased oil prices after Trump postpones attack on Iran
Asia-Pacific markets largely opened higher Tuesday, as oil prices, though still elevated, showed a slight softening following news of President Donald Trump's decision to postpone an attack on Iran.
Investors were also digesting Japan's first-quarter GDP figures, which revealed the economy grew at an annualized 2.1% in the first three months of the year. This growth surpassed Reuters-polled analysts' average estimate of 1.7% and improved upon the previous quarter's 1.3%. These figures do not fully capture the impact of the Iran war, which commenced in late February.
Japan's Nikkei 225 initially gave up early gains to trade marginally lower, while the Topix gained 0.61%.
A summit meeting between Japan's Prime Minister Sanae Takaichi and South Korea's President Lee Jae Myung is also on the agenda for today. South Korea's Kospi extended its early losses, dropping 3.86%, and the small-cap Kosdaq fell 3.40%.
Australia's S&P/ASX 200 rose by 0.89%.
Mainland China's CSI 300 index traded flat, and Hong Kong's Hang Seng index added 0.26%.
Standard Chartered's Hong Kong-listed shares climbed 2.44% after the lender increased its 2028 return target to 15%, a 3 percentage point rise from 2025. The bank also plans a 15% reduction in its corporate functions roles by 2030.
Technology layoffs could dampen economic growth, Bank of America says
According to a new note from Bank of America, widespread layoffs in the information technology sector could significantly impact U.S. economic growth.
In April, 40% of all layoffs occurred in technology, posing risks for consumption growth. "The engine of consumption growth from the 80s onward - skilled professional services, filled by college grads - is gumming up," stated Savita Subramanian, head of U.S. equity and quantitative strategy, in a Monday note to clients. She added that "by payroll dollars, layoffs are very significant," noting that the college graduate unemployment rate is at recessionary levels.
This wave of layoffs emerges as investors contemplate how artificial intelligence will disrupt various industries, from financial services to software and legal services. Many publicly traded firms are integrating AI to streamline operations, often leading to staff reductions. However, the stock market's reaction to these AI-driven workforce cuts has been unpredictable, highlighting the uncertainty surrounding AI's broader adoption.
30-year fixed mortgage rate hits highest level since July 2025
The average rate for a 30-year fixed mortgage climbed to 6.68% on Monday, marking its highest point since July 31, 2025, when it reached 6.75%.
These mortgage rates are closely tied to the performance of the 10-year Treasury. The increase in borrowing rates coincides with the 10-year Treasury yield reaching 4.631%, its highest level since February 12, 2025.
Stocks making the biggest moves after the bell: Agilysys, Akamai Technologies
These stocks saw the most significant movements in extended-hours trading:
- Agilysys — The hospitality software stock surged 16% after reporting fourth-quarter adjusted earnings of 63 cents per share, surpassing last year's 54 cents. Agilysys' $82.9 million revenue also beat FactSet analysts' expectation of $81.6 million. Furthermore, the company provided full-year revenue guidance between $365 million and $370 million, exceeding the consensus estimate of $363.6 million.
- Akamai Technologies — Shares dipped 3% after the cloud computing and cybersecurity firm announced a proposed offering of convertible senior notes totaling $2.6 billion.
