U.S. stock futures slipped Monday as traders positioned for Nvidia's earnings and a fresh Iran sanctions package from the Treasury. Tech shares led early declines after a losing week, while rising Treasury yields added further pressure on equity valuations. Investors are also watching for Fed Chair Kevin Warsh's Jackson Hole speech later in the week.
Futures fall as Nvidia earnings and Iran sanctions loom
U.S. equity futures weakened during European trading on Monday, with Nasdaq 100 futures down 0.6% and S&P 500 futures off 0.2% as investors braced for Nvidia's quarterly results on Wednesday. The report is a major test of enthusiasm for the AI trade, with markets watching whether spending by large technology companies can keep supporting elevated valuations.
The moves followed a rough week for major indexes. The Dow fell 0.8% last week, its second straight weekly pullback, while the S&P 500 and Nasdaq shed 1.4% and 2%, respectively, snapping three-week winning streaks.
Rising Treasury yields add to the pressure
Stocks also face headwinds from climbing bond yields. The 10-year Treasury yield has surged nearly 70 basis points since the Iran war began, pushing 30-year mortgage rates close to 6.75%. Higher yields raise the interest rate used to discount future corporate earnings, which mechanically compresses valuations for growth stocks.
Treasury Secretary Scott Bessent's department more than doubled its long-bond buyback program on August 19, raising the maximum per-operation size from $2 billion to at least $4 billion.
Server cost increases test the AI spending cycle
Concerns over AI infrastructure economics have also grown after a Bloomberg News report that Nvidia's largest customers could face price increases of more than 15% for servers using its next-generation Vera Rubin and Grace Blackwell chips scheduled for delivery early next year. Server manufacturers supplying Microsoft, Alphabet's Google and Oracle have reportedly informed customers about the higher prices.
Geopolitical risk adds another layer. Bessent is preparing to unveil a new sanctions package against Iran on Monday. Separately, Iranian officials have threatened to halt oil exports if the pressure continues. Any disruption to shipping through the Strait of Hormuz could push oil prices higher and add to inflation, complicating the rate outlook central banks face heading into Fed Chair Kevin Warsh's Jackson Hole speech on Friday.
Sources: InvestorsHub, CNBC, Crypto Briefing
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