The major U.S. index futures are currently pointing to a higher open on Tuesday, with stocks likely to regain ground following the weakness seen in the previous session.

Traders may look to pick up technology stocks at somewhat reduced levels following the sell-off seen in the sector during Monday’s trading.

Shares of Nvidia (NASDAQ:NVDA) are surging by 3.3 percent in pre-market trading after the AI darling and market leader plunged by 17.0 percent in yesterday’s session.

Buying interest may be somewhat subdued, however, as traders look ahead to the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed is almost universally expected to leave interest rates unchanged, but traders are likely to pay close attention to the accompanying statement for clues about the outlook for rates.

Recent economic data has led to concerns about the Fed leaving rates on hold for a prolonged period, but many economists still expect the central bank to resume cutting rates sometime in the first half of the year.

CME Group’s FedWatch Tool is currently indicating a 74.5 percent chance rates will be lower by at least a quarter point following the Fed’s June meeting.

U.S. stocks closed mostly lower on Monday, with those in the technology sector recording more pronounced losses due to sustained selling pressure throughout the day’s trading session.

Among the major averages, the Dow closed up 289.33 points or 0.7 percent at 44,713.58. The S&P 500 ended down 88.96 points or 1.5 percent at 6,012.28, while the Nasdaq plunged 612.47 points or 3.1 percent to 19,341.83.

Technology stocks tumbled on earnings concerns following China’s low-cost startup DeepSeek’s emergence as a powerful AI model. DeepSeek’s AI Assistant has overtaken ChatGPT on Apple’s App Store, sparking fears that U.S. AI leaders could lose their dominance.

DeepSeek’s ascendance has cast doubt on Silicon Valley’s hefty AI capex spending and the sustainability of the U.S. technical edge in artificial intelligence.

“Potentially, this technology could be a game-changer, and questions are being asked about the huge amounts of money the traditional tech players, the so-called Magnificent 7, have been ploughing into AI development,” said ING.

Nvidia shares plunged nearly 17 percent. Micron tumbled 11.7 percent, AMD closed down 6.4 percent, and Cisco closed lower by 5 percent. Alphabet, Intel, Tesla and Microsoft also ended sharply lower.

PepsiCo, Apple, Amgen, Costco, Meta Platforms, Microchip, AstraZeneca, Starbucks, PayPal and Texas Instruments closed with sharp to moderate gains.

Concerns about the outlook for interest rates also weighed on Wall Street ahead of the Federal Reserve’s monetary policy meeting.

On the economic front, new home sales in the U.S. surged by much more than expected in the month of December, according to a report released by the Commerce Department.

The report said new home sales shot up by 3.6 percent to an annual rate of 698,000 in December after soaring by 9.6 percent to an upwardly revised ate of 674,000 in November.

Economists had expected new home sales to climb 0.9 percent to an annual rate of 670,000 from the 664,000 originally reported for the previous month.

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