Dow Jones Futures jump as Fed easing hopes boost risk appetite

• Dow Jones futures point to a frail recovery on Wednesday.
• Wall Street is set to open mixed, with concerns of an AI bubble still weighing.
• Dwindling hopes of a Fed rate cut in December are adding pressure on equities.

 
Dow Jones Index futures are showing minor gains during Wednesday's European morning session as market sentiment remains fragile on concerns about an overvaluation of tech stocks, as markets reassess their expectations of monetary easing by the Federal Reserve.

The main Wall Street Indexes are set to open mixed on Wednesday, following significant declines on Tuesday. The Dow Jones Index trades 0.1% higher, at the 47,300 area, while S&P futures posts losses below 0.1%, at 6,795. The Nasdaq remains the worst performer with the tech sector in the spotlight and drops 0.2% trading at 25,522 during the early European session.

Fears of an AI bubble increase

The CEOs of Morgan Stanley and Goldman Sachs spooked investors on Tuesday at an investment summit in Hong Kong, warning that markets might be heading to a significant correction in the next six months to a year. The overstretched valuations of AI-related firms bring back memories of the dot-com bubble at he start of the century.

Beyond that, the hawkish turn by the Federal Reserve (Fed), as chairman Jerome Powell warned about excessive confidence in a December rate cut and the wide divisions within the Board on the monetary policy path, is acting as headwinds for equity markets.

Sharp declines in tech stocks dragged Wall Street lower on Tuesday, with Pallantir Technologies leading losses, despite its positive quarterly forecasts, with Uber following closely as its earnings reports missed forecasts.

With the US Government shutdown entering its fifth week, the focus on Wednesday will be on the ADP Employment report. Private Payrolls are expected to have increased by 25,000, partially reversing the 32,000 net loss seen in September, but still well below the 150,000 average jobs created from 2010 to 2025.