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US equity-index futures fell and Treasuries edged higher, underscoring a cautious mood heading into the market’s reopening after a holiday.
Contracts for the S&P 500 dropped 0.4 per cent and those for the Nasdaq 100 Index slipped 0.7 per cent in a sign of risk aversion before the US returned Tuesday after observing the Presidents’ Day holiday on Monday.
Asian stocks fell 0.1 per cent in thin trading, with China, Hong Kong and several regional markets shut for the Lunar New Year. European shares were also set for a weaker open.
Treasury 10-year yields fell two basis points to 4.03%. Precious metals slid. Japan’s bonds rallied across the curve after demand at a bond auction showed signs of stabilization. Oil held its gains, with traders pricing in higher geopolitical risk after Iran held naval exercises near a critical shipping corridor before talks with the US.
“Several market holidays and a lack of fresh catalysts are putting stocks on the defensive today,” said Tim Waterer, a market analyst at KCM Trade. “Traders are headline-watching events between the US and Iran, with the latter’s recent drills just doing enough to dull any signs of risk appetite.”
Developments in the Middle East have thrust geopolitical risk back into focus, as traders also weigh the outlook for Federal Reserve interest-rate cuts following Friday’s inflation data. Shifting sentiment around artificial intelligence is adding to the unease, rippling beyond the tech sector amid the emergence of the so-called AI scare trade.
Iranian Foreign Minister Abbas Araghchi held talks with the head of the UN’s atomic watchdog in Geneva on Monday, ahead of a second round of nuclear negotiations with the US.
Trump has threatened to strike the Islamic Republic unless it agrees to a deal curbing Tehran’s nuclear program in exchange for sanctions relief. He’s mobilized warships and fighter jets near Iran in response to a recent deadly crackdown by the regime there following mass protests.
Investors seeking clues on the Fed’s rate path will get a chance Tuesday, when Governor Michael Barr speaks on the labor market and AI, while San Francisco Fed President Mary Daly discusses AI and the economy. Traders will also be watching for ADP private payrolls numbers on Tuesday and the minutes from the Fed’s January meeting on Wednesday for a fresh read on the economy.
In Japan, demand at a five-year government bond auction increased for the first time since September amid receding expectations for an early rate hike by the country’s central bank. This was the first auction of conventional Japanese government bonds after Prime Minister Sanae Takaichi’s historic election victory earlier this month.
Meanwhile, the impact of AI, which has driven selling pressure across multiple stock-market sectors in recent weeks, continued to draw attention. The S&P 500 has declined for two straight weeks and is down 0.1% this year. The tech-heavy Nasdaq 100 has fallen for three consecutive weeks, leaving it about 2% lower year-to-date.
A JPMorgan Chase & Co. team led by Mislav Matejka urged caution on stocks at risk of AI-driven “cannibalization” including software, business services and media companies.
Firms are developing tools to capitalize on the divergence. Goldman Sachs Group Inc. launched a new basket of software stocks that goes long firms that will benefit from AI adoption, while shorting the companies whose workflows could be replaced.
With AI disruption rippling through markets, a lot will come down to earnings resilience, particularly in the US.
“When you look at the current earnings season, the companies are showing 13% growth,” Nataliia Lipikhina, head of EMEA equity strategy at JPMorgan, told Bloomberg TV. “Overall, this is the reason why we continue to be positive on the S&P.”
(This story was produced with the assistance of Bloomberg Automation)
More stories like this are available on bloomberg.com
Published on February 17, 2026
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