Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., November 17, 2025. REUTERS/Brendan McDermid

By Shashwat Chauhan and Twesha Dikshit

(Reuters) -U.S. stock index futures fell on Tuesday, as concerns over lofty equity valuations and diminishing prospects of an interest rate cut weighed on sentiment, while investors look ahead to Nvidia's earnings and key government data due later this week.

Most heavyweight tech stocks were under pressure in premarket trading, with Amazon.com, down 1.5%, leading the declines. Chip stocks, including Advanced Micro Devices and Broadcom, also slipped early on.

"(There are) concerns over AI spending increasingly being financed through the debt markets versus free cash flow. While it is likely not a game changer, it raises the stakes for generating a positive return on investment in such a massive spend," Tom Nelson, Franklin Templeton Investment Solutions' head of market strategy, wrote in a note.

"This week we have several data points on tap that can help connect the dots between the little picture and the big picture."

Nvidia's quarterly results, due after markets close on Wednesday, are seen as a litmus test for the AI-driven rally that has pushed markets to record highs this year. The chip designer's shares were down 1.3%, extending Monday's near 2% drop.

Alphabet CEO Sundar Pichai told the BBC in an interview on Tuesday that no company would be unscathed if the AI boom collapses.

At 06:43 a.m. ET, Dow E-minis were down 236 points, or 0.51%, S&P 500 E-minis were down 22 points, or 0.33%, and Nasdaq 100 E-minis were down 94.5 points, or 0.38%

Dow component Home Depot cut its fiscal-year profit forecast on Tuesday amid weak demand due to tariff-led economic uncertainty. Shares dropped 2.8%.

Retail giants Walmart and Target also report this week, with their results expected to provide insights into the health of the American consumer.

Concerns over high valuations and dwindling expectations of the Federal Reserve cutting interest rates in December have led to a halt in U.S. stocks rally, with the S&P 500 down more than 3% from its October peak.

All the three benchmark indexes ended lower on Monday, with the S&P 500 and the Nasdaq closing below their 50-day moving averages, an important technical threshold, for the first time since late April.

The Dow closed below its 50-day moving average for the first time since October 10.

EYES ON DATA AS SHUTDOWN IN REAR-VIEW

Key economic data releases are expected in the next few days, after the longest government shutdown in U.S. history officially ended last week.

The much-delayed September jobs report is set to be released on Thursday, but may do little more than confirm earlier private market surveys pointing to a cooling labor market.

An August factory orders report is expected later on Tuesday.

Meanwhile, traders now see a 46.4% chance of an interest rate cut from the Fed in December, down from nearly 67% a week ago and a more than 93% chance recorded a month earlier, according to the CME FedWatch Tool.

At least three Fed officials are expected to make public remarks through the day.

Before the bell, Axalta Coating Systems rose 7.1% after Dulux paint maker AkzoNobel said it plans to merge with the company.

(Reporting by Shashwat Chauhan and Twesha Dikshit in Bengaluru; Editing by Shilpi Majumdar and Krishna Chandra Eluri)