U.S. equity futures moved higher on Thursday, putting Wall Street on course for a positive start as investors welcomed another strong set of results from Nvidia (NASDAQ:NVDA) and renewed their enthusiasm for artificial intelligence-related stocks.
Technology shares were positioned to lead the advance, with Nasdaq 100 futures gaining around 1%. Nvidia jumped 6.5% in pre-market trading after second-quarter results surpassed expectations and the company issued an upbeat revenue forecast for the current quarter.
The performance offered fresh evidence that spending on artificial intelligence infrastructure remains robust and helped lift sentiment across the wider technology sector.
“Nvidia once again delivered stronger-than-expected results, providing some reassurance that the AI investment cycle remains intact,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
Nvidia results put technology stocks back in focus
Nvidia’s latest numbers have taken on particular importance for the wider market because of the company’s position at the centre of the AI infrastructure boom. Strong demand for its technology is being closely watched as an indicator of whether heavy investment in artificial intelligence continues to translate into growth.
The earnings release also arrived after a subdued Wall Street session in which investors appeared reluctant to take significant positions before seeing Nvidia’s numbers.
“Assuming there is no major movement in either a positive or negative direction in geopolitical terms, tonight’s second quarter results from Nvidia are likely to set the tone for markets through the remainder of the week,” said AJ Bell investment director Russ Mould.
Federal Reserve outlook remains another key catalyst
Nvidia may dominate the immediate market narrative, but monetary policy remains firmly on investors’ radar ahead of Federal Reserve Chairman Kevin Warsh’s appearance at the Jackson Hole economic symposium on Friday.
Warsh has generally avoided offering extensive forward guidance, although markets will be looking for any indications about whether interest rates are likely to remain unchanged or move higher.
CME Group’s FedWatch Tool currently assigns a 66.1% probability to the Federal Reserve keeping rates unchanged next month, while the probability of a quarter-point increase stands at 33.9%.
PCE inflation remains sticky
The latest U.S. inflation figures reinforced the uncertainty surrounding the rate outlook. The headline personal consumption expenditures price index increased 0.2% in July after falling 0.1% in June. Economists had expected a smaller 0.1% increase.
Annual PCE inflation remained at 3.7%, rather than easing to the expected 3.6%.
Core PCE inflation, which excludes food and energy, increased 0.2% month over month, matching expectations. The annual core rate remained unchanged at 3.3%, also in line with forecasts.
The figures suggest inflationary pressures remain persistent, giving the Federal Reserve another reason to maintain a careful approach to future policy decisions.
Major indices look to recover from modest losses
Wall Street finished the previous session slightly lower following a day of narrow and indecisive trading. The Dow fell 113.52 points, or 0.2%, to 53,463.88, while the Nasdaq declined 21.10 points, or 0.1%, to 26,130.20. The S&P 500 slipped 1.58 points, or less than 0.1%, to 7,675.70.
There were nevertheless areas of strength beneath the surface. Computer hardware stocks advanced, pushing the NYSE Arca Computer Hardware Index up 1.9%, while the NYSE Arca Networking Index gained 1.6%. Natural gas shares also performed well, with the NYSE Arca Natural Gas Index rising 1.5%.
Gold stocks were among the weaker performers as precious metal prices declined, sending the NYSE Arca Gold Bugs Index down 2.9%. Pharmaceutical stocks also struggled, with the NYSE Arca Pharmaceutical Index falling 2%.
With Nvidia providing a fresh catalyst for AI and technology shares, U.S. markets appear positioned to regain momentum at the opening bell. Investors will now be watching whether the technology-led advance can broaden while awaiting Friday’s Jackson Hole speech for the next major signal on monetary policy.
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