U.S. inflation data ahead; Huang scandal fallout - what’s moving markets

 Futures linked to the main U.S. stock indices hover around both sides of the flatline, as investors await key inflation figures and assess fragile sentiment around the artificial intelligence trade. Oil falls to roughly $90 a barrel on hopes for a diplomatic resolution to the Iran war, while Nvidia shares tick higher in after-hours trading following a selloff on Monday triggered by a scandal surrounding CEO Jensen Huang. 

1. Futures mixed

U.S. stock futures pointed to a mixed open on Tuesday. By 03:17 ET (08:17 GMT), the S&P 500 futures contract had risen by 13 points, or 0.2%, while Nasdaq 100 futures had dipped by 22 points, or 0.1%. The Dow futures contract was higher by 252 points, or 0.5%.

The main averages on Wall Street gained in the prior session, as a renewed bout of dip-buying powered the benchmark S&P 500 to its best day since April. Optimism once again brightened around AI following last week's roller-coaster moves in stocks exposed to the nascent technology, with a tracker of the semiconductor industry in particular notching its largest one-day gain since July.

Following a series of selloffs and recoveries, the S&P 500 is now down "only" 0.25% in the four business days after the U.S. midterm elections, analysts at Deutsche Bank noted. Traders have been attempting to gauge whether a major victory for Democrats, especially in gubernatorial races in states that host massive data center projects, will lead to slowdown in AI development.

"There wasn’t an obvious catalyst for the bounceback, but as our equity strategists noted, equity positioning had become sizably underweight after last week’s moves, and in tech, positioning was now beneath its lows after Liberation Day," the Deutsche Bank analysts said.

2. CPI ahead

Attention now turns to the release of monthly U.S. inflation figures, which could help clarify the path ahead for Federal Reserve interest rate policy.

Headline consumer prices are tipped to have risen by 3.9% in the twelve months to October and 0.3% month-over-month. The so-called "core" gauge, which strips out volatile items like food and fuel, is seen increasing by 2.8% year-over-year and 0.2% month-over-month.

Energy is still the "principal swing factor" for overall price gains, flagged analysts at Truflation, an alternative data provider. For October, Truflation has projected a 20.7% rise in energy prices versus a year earlier, with gasoline climbing 37.7%.

Higher costs at the gas pump partially fueled discontentment over affordability that helped drive a sharp rebuke of U.S. President Donald Trump's economic policy in midterm elections. American voters widely supported Democratic challengers to Trump's Republican candidates in several statewide races, giving Democrats control over both chambers of Congress in the process. The victory could make it more difficult for Trump to aggressively pursue his policy goals, including the ongoing war with Iran and tariffs on global trading partners.

Crucially, the outcome of the Labor Department's consumer-price index could sway rate projections. Solid labor market data last Friday may have given Fed officials more headroom to raise rates next month, after policymakers rolled out their first increase in three years in September. In theory, lifting borrowing costs can quell inflation, albeit at the risk of weighing on overall economic activity and the job market.

3. Oil slips to around $90

Also bolstering stocks has been a downward slide in oil prices, which has dragged the benchmark Brent crude futures contract to roughly $90 a barrel.

As recently as late October, Brent was exchanging hands at over $115 a barrel, as markets fretted over the prospect of new and intense U.S. attacks on Iran in the wake of the midterms.

However, diplomatic efforts have appeared to gain momentum. Trump has signaled that he would like to find an end to the war with Iran, a conflict now in its ninth month that has been partly responsible for pushing up energy prices and elevating inflation.

The president's comments came after a meeting with the prime minister of Qatar, a frequent mediator between Washington and Tehran. Still, Trump warned that U.S. is "locked and loaded," while describing Iran's military "effectively over." Citing an official familiar with the matter, Bloomberg News reported that talks between the U.S. and Iran will carry on and there will likely not be a fresh military escalation.

4. Nvidia shares in focus amid Huang scandal

Elsewhere, shares of Nvidia edged higher in extended hours trading after the AI-darling fell by more than 4% following the company's announcement of an independent investigation into CEO Jensen Huang.

In a memo to employees, Huang admitted to having a romantic relationship with a businesswoman from a Singapore-based firm who was allegedly a spy for China. The news has rattled Nvidia, who has become a bellwether -- and frequent financial backstop -- of the AI industry under Huang.

Speaking to reporters during a press briefing at the White House, Trump said “I know the FBI is looking into [Huang] and I think that he’ll be in good shape.”

“I asked him that question. Did you have any idea that she was a spy? He said I had no idea that she was a spy and I really believe him,” Trump said.

5. Anthropic roughly $70 billion IPO plan retracted after circulated to banks - Reuters

Anthropic may begin formally marketing its potential blockbuster initial public offering on Tuesday, giving the Claude-maker the opportunity to pitch itself as a solid investment despite broader ructions in the AI sector.

The company reportedly sent bankers details of the IPO before retracting the pricing information, saying the figures were inaccurate, Reuters reported on Monday, citing emails seen by the news agency.

Anthropic initially circulated a copy of an IPO filing indicating plans to offer about 867 million shares at a price range of $70 to $80 apiece, potentially raising as much as $69.3 billion. But it later sent another email to bankers saying the pricing details were inaccurate and that an updated filing would be provided later, according to the Reuters report.