Overview
Futures tied to the major U.S. stock indices were largely indecisive on Tuesday as traders braced for fresh macro data and corporate earnings in a week shortened by public holidays. The market mood reflected a continued shift away from high-flying technology names toward more defensive sectors, amid renewed questions about the scale and return on heavy capital spending tied to newly deployed artificial intelligence models.
1. Futures hover near flat
By 03:04 ET (08:04 GMT), U.S. futures showed modest weakness: Dow futures were down 26 points, or about 0.1%; S&P 500 futures had fallen 11 points, or roughly 0.2%; and Nasdaq 100 futures were off 99 points, or about 0.4%. Equity trading on U.S. markets had been paused on Monday for a public holiday.
At the prior full session, U.S. benchmarks closed mixed as investors digested two related pressures. First, markets were mulling the potential industry-wide implications of recent AI model releases and the substantial infrastructure investment supporting them. Second, investors weighed whether such heavy spending would translate into material returns for the largest technology companies. Those dynamics accompanied data showing that headline U.S. consumer price gains eased by more than expected in January, a print that increased expectations the Federal Reserve could accelerate the timing of its next rate cut after delaying an easing cycle last month.
In that context, the tech-heavy Nasdaq Composite slipped by 0.2% at the last full-session close, while the S&P 500 and the blue-chip Dow Jones Industrial Average advanced.
2. Oil prices respond to U.S.-Iran talks
Brent crude declined modestly on Tuesday as markets focused on scheduled talks between U.S. and Iranian ministers in Geneva. By 03:06 ET, Brent futures for April were down 0.7% at $68.13 a barrel. U.S. West Texas Intermediate futures for April were quoted at $63.11 a barrel, up 0.6% by the same time; the WTI move was influenced by the U.S. holiday on Monday.
Traders also noted dollar strength ahead of a slate of economic and Federal Reserve cues this week, a factor that tended to weigh on crude prices. The Geneva meeting, intended to address Iran's nuclear enrichment activities, took place amid rising military tensions in the Middle East and additional U.S. force mobilization in the region. The article notes that U.S. President Donald Trump has repeatedly threatened military action against Iran if it does not accept a U.S. deal.
Liquidity in the larger Asian trading complex was limited, with trading volumes muted by Lunar New Year holidays in China, Hong Kong, Taiwan, South Korea, and Singapore.
3. Precious metals retreat
Gold and silver both pulled back on Tuesday as metal markets stayed sensitive ahead of upcoming U.S. economic releases. At 03:09 ET, spot gold was reported down 1.4% to $4,919.72/oz, while April gold futures were noted as falling 2.2% to $4,941.74/oz. Spot silver slipped 2.0% to $75.0925/oz. Spot platinum inched higher by 0.2% to $2,024.79/oz.
These moves followed significant volatility in precious metals over the previous two weeks, leaving both gold and silver noticeably under their late-January highs. Market attention is now focused on several U.S. datapoints scheduled for release: industrial production figures due on Wednesday and the personal consumption expenditures (PCE) price index, a preferred Fed inflation gauge, set for Friday. Officials also plan to publish minutes from the Federal Reserve's January meeting, during which the central bank held its policy rate steady in a 3.5% to 3.75% range.
4. Palo Alto Networks' results may offer new color on tech
Palo Alto Networks, the California-based cybersecurity company, is set to report earnings after the U.S. market close on Tuesday. Investors will be watching for signals on demand for digital security products and how the company positions itself amid intensified competition tied to newly released AI models.
In November, Palo Alto raised its full-year revenue and profit guidance, citing increased demand for its security offerings. The company also unveiled a $3.35-billion acquisition of Chronosphere, a cloud management and monitoring business, and said it planned to fold the unit into its Cortex AgentiX platform. Management described the intended integration as enabling Palo Alto's AI agents to leverage Chronosphere data to pinpoint performance issues and identify root causes.
Palo Alto also announced a separate transaction involving identity security firm CyberArk Software. The Chronosphere acquisition, alongside the CyberArk deal, is expected to close in the second half of Palo Alto's fiscal 2026.
5. Japan growth miss weighs on Nikkei
Japan's Nikkei extended losses after official data showed the country's economy expanded far less than forecast in the fourth quarter. Gross domestic product rose at an annualized 0.2% in October-December, well below expectations of 1.6%, though the reading marked a rebound from a 2.6% annualized contraction in the third quarter.
The weaker-than-expected growth print highlighted the economic hurdles facing Prime Minister Sanae Takaichi's government following a large electoral victory earlier in the month. While the administration appears positioned to pursue stimulus measures aimed at boosting activity, it must also contend with ongoing cost-of-living pressures that have weighed on domestic demand. The situation is compounded by monetary policy considerations at the Bank of Japan, where officials have indicated plans to continue raising borrowing costs after a prolonged period of ultra-low rates, even as they seek to address stubborn inflation and a weak yen.
Key takeaways
- Equity futures were mixed to slightly lower ahead of key U.S. economic data and a busy corporate earnings calendar, with tech under pressure amid AI-related spending concerns.
- Oil prices reacted to U.S.-Iran discussions in Geneva and dollar strength ahead of major U.S. data releases, leaving Brent modestly lower and WTI influenced by a U.S. holiday.
- Precious metals retreated following recent volatility, with markets focused on industrial production and the PCE price index as proximate drivers of Fed policy expectations.
Risks and uncertainties
- Geopolitical risk tied to U.S.-Iran negotiations and heightened military activity in the Middle East could affect oil markets and regional risk sentiment.
- Uncertainty over how AI-related capital expenditure will translate into returns for tech companies may continue to drive sector rotation and earnings volatility in technology and related hardware industries.
- Upcoming U.S. economic readings, including industrial production, PCE inflation data, and the Fed's January meeting minutes, could shift expectations for the timing of interest-rate cuts and influence asset prices across equities, fixed income, and precious metals.
Outlook
With a convergence of corporate earnings, geopolitical discussions, and critical U.S. data this week, markets are likely to remain sensitive to incoming information. Traders and investors will parse quarterly reports such as Palo Alto Networks' and the PCE inflation figures for clues on demand trends, margin trajectories, and the Federal Reserve's policy roadmap. In the near term, liquidity conditions and holiday-influenced trading patterns across Asia are likely to accentuate moves in risk assets and commodities.