US index futures are trending lower on Tuesday, with S&P 500 futures down nearly 0.7% and Nasdaq 100 futures losing around 1.1%, marking a potential third consecutive losing session. Investor sentiment is clouded by ongoing geopolitical tensions in the Middle East and profit-taking ahead of Nvidia’s upcoming earnings report. The semiconductor sector is particularly affected, with the Philadelphia Semiconductor Index down 1.4%, reflecting concerns over valuation and data center spending sustainability.

The rise in the 30-year US Treasury yield, now above 5.18%, adds to the pressure on equities, especially in the tech and semiconductor sectors, as higher borrowing costs could dampen consumer spending. Meanwhile, recent data shows a slight increase in pending home sales, indicating some resilience in the housing market despite elevated financing costs. However, inflationary pressures are resurfacing, potentially complicating the Federal Reserve’s monetary policy approach.

A key takeaway for market professionals is the shifting focus from high-flying semiconductor stocks to more stable sectors, such as software and consumer staples, as investors reassess risk in light of rising yields and geopolitical uncertainties.

StoxFeed tracks this as a market signal: AI and semiconductor stocks are driving tech sector gains

Source: xtb.com