NEW YORK, Feb 17 (Reuters) –
- U.S. stock futures slipped early Tuesday, with traders sorting through new anxiety over AI-fueled upheaval and ongoing geopolitical concerns.
- Index funds and ETFs keep getting cheaper thanks to ongoing fee reductions, while news tied to individual stocks is sparking some big swings.
- Friday brings a loaded calendar: big economic reports and a U.S. Supreme Court opinion day both land, drawing traders’ attention.
U.S. stock futures pointed lower early Tuesday, with Nasdaq 100 E-minis off 0.86% and S&P 500 E-minis slipping 0.42% as of 8:36 a.m. ET. Worries over how the latest rush of artificial intelligence tools might shake up corporate pricing weighed on sentiment. U.S.-Iran nuclear negotiations also crept into the picture. “You are seeing a rebalance,” said Stash Graham, managing director and CIO at Graham Capital Wealth Management. (Reuters)
The AI trade isn’t the sure thing it once seemed. “The markets are taking each sector one-by-one and stress testing their business models to see how resilient they would be to AI disruption,” said Axel Botte, head of market strategy at Ostrum Asset Management. (Reuters)
New investors are hitting turbulence just as it’s getting cheaper to buy into the U.S. market. Vanguard, earlier this month, announced fee cuts across 53 index mutual funds and ETFs—a change the firm says will put about $250 million a year back in investors’ pockets. “Low fees have been a powerful marketing and behavioral hook,” said Jeff DeMaso, editor at the Independent Vanguard Adviser. Friday morning brings more data: the Commerce Department drops its advance fourth-quarter GDP figure and the personal income and outlays numbers at 8:30 a.m. ET. Markets tend to treat those as a checkup on how growth and inflation are holding up. (Reuters)
Earnings season hasn’t cleared up the uncertainty. As of Feb. 13, FactSet figures showed that 74% of S&P 500 companies had posted their fourth-quarter numbers, and about three-quarters beat EPS forecasts—a touch under the five-year average. Even so, the index was still on pace for double-digit earnings growth from a year earlier. (insight.factset.com)
What does it actually mean to “invest in the U.S. stock market” when you’re just getting started?
First up: what’s actually in your cart. An ETF—exchange-traded fund—collects cash from investors, assembles a basket of assets, and trades on an exchange throughout the day. Plenty are built for broad diversification, but you’ll also find ETFs targeting specific market slices. Index funds, meanwhile, come as mutual funds or ETFs and aim to mirror a market index. Think S&P 500 or Russell 2000: investors can’t buy these indexes directly, so index funds offer a way in. (Investor.gov)
Next up: figure out your mix. Asset allocation means dividing your money among stocks, bonds, and cash, with the split shifting based on your time horizon and how much risk you’re up for. Diversification isn’t just about owning a few things—it’s about spreading your bets both across and within those buckets. And rebalancing? That’s where investors cut back on the winners and top up the laggards, aiming to keep their original allocation intact. (Investor.gov)
Plumbing is part of the story, too. Many newcomers go in through a brokerage account, but protections can get confusing fast: SIPC steps in if a SIPC-member broker fails and customers’ cash or securities go missing—coverage goes up to $500,000, with a $250,000 cap for cash—but losses from the market itself aren’t covered. (SIPC)
Dig into more than just the price chart—check out the company or fund itself. The SEC’s EDGAR database is essential for that, offering access to 10-Ks, 10-Qs, and those 8-K filings that cover significant events. (SEC)
Before you hit that buy or sell button, take a hard look at the order ticket. A market order will go through right away, but your price isn’t locked in—whatever’s available fills your order. With a limit order, you set the price you’ll accept or better. That detail really comes into play if things get choppy, spreads blow out, or prices jump around. Then there are stop orders (or stop-loss orders). Once the trigger price gets touched, your stop becomes a market order—sometimes that works in your favor, sometimes it backfires if things are moving fast. (Investor.gov)
Fees can quietly drain returns, a detail that often slips past new investors. Mutual funds and ETFs are required to list a standardized fee table in their prospectuses—the expense ratio, expressed as a yearly percentage of fund assets spent on operating costs, appears right there. But that table doesn’t tell the whole story, Investor.gov cautions. Hidden costs like brokerage commissions and other intermediary charges aren’t included. (Investor.gov)
Next up: taxes. Traders who move in and out of positions frequently can get caught off guard. The IRS tags your gains and losses as long-term when you’ve held an asset for over a year, or short-term for a year or less—each category faces its own tax rules. (IRS)
Still, for newcomers, leverage stands out as a real risk in a market like this. Investor.gov warns that trading on margin can do more than just magnify gains — losses can snowball, sometimes exceeding your initial investment, while margin calls may force investors to liquidate positions as prices drop. (Investor.gov)
Scam artists usually chase whatever’s trending, and right now, AI is the hook. FINRA flags “too good to be true” pitches—think promises of “guaranteed” big returns with barely any risk—as textbook warning signs. The regulator tells investors: check whether your broker or trading platform is properly registered. (FINRA)
Headline risk was front and center in Tuesday’s premarket action. Shares of Masimo soared about 34% after Danaher said it would snap up the company for $180 a share, but Danaher stock dropped around 6% following the announcement. ZIM, meanwhile, rallied close to 50% on news that Hapag-Lloyd is acquiring the container shipper in a $4.2 billion deal. Norwegian Cruise Line climbed about 6% after the Wall Street Journal reported that activist Elliott Investment Management had taken a stake above 10%, bringing it back into the mix with Royal Caribbean and Carnival. Warner Bros Discovery and Paramount both moved higher after Warner Bros knocked back a revised bid from Paramount. (Reuters)
Eyes turn to Friday for the next big event. The Supreme Court is slated to issue opinions on Feb. 20, lining up with its usual 10 a.m. start in Washington. That timing tends to hit right as market players are working through the day’s first data. (SCOTUSblog)
