On Thursday, the Nasdaq futures increased by more than 2% as Nvidia (NASDAQ:NVDA) shares rocketed on the back of a blowout forecast from the chipmaker that also fueled an AI rally. Additionally, progress in U.S. debt ceiling negotiations also lifted the mood.
The world’s most valuable listed semiconductor company, Nvidia Corp., saw a 29.8% increase in premarket trading.
The company said it was scaling up production to satisfy soaring demand for its artificial intelligence chips that power ChatGPT and related services. The company expects current-quarter sales to be more than 50% higher than Wall Street projections.
Following the release of Nvidia’s projection, major participants in AI, including Microsoft Corp (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) Inc, each saw a little increase of roughly 3%.
Sam Stovall, chief investment strategist of CFRA Research in New York, declared that “AI is the word of the month.” Investors are merely searching for any sector expected to rise, and semiconductors are currently that sector.
Broadcom (NASDAQ:AVGO) Inc., Micron Technology Inc. (NASDAQ:MU), and Advanced Micro Devices (NASDAQ:AMD) Inc. all saw gains of between 2% and 9%.
Intel Corp (NASDAQ:INTC), a Dow Jones Industrial Average member with minimal AI exposure, decreased 2.9%.
Investors are awaiting information on whether Congress will reach an agreement to extend the country’s $31.4 trillion debt ceiling or face a catastrophic default. As a result, Wall Street’s main indexes have fallen substantially in the previous two sessions and may have had their worst week in more than two months.
The White House and congressional Republicans will pick up their talks again later in the day to try to achieve an agreement as the June 1 deadline approaches after what both sides hailed as good discussions on Wednesday.
U.S. House Speaker Kevin McCarthy said on Thursday negotiators have made “some progress”.
The yields on U.S. Treasury bills maturing in early June increased beyond 7% due to market turbulence, and two-year yields reached their highest level since March due to ratings agencies Fitch and DBRS Morningstar placing the United States on credit alert for a potential downgrade.
“It’s appropriate for debt rating agencies to put the United States credit rating on negative watch; it essentially says if you can’t keep your financial house in order, then you probably shouldn’t be given the highest credit rating,” continued Stovall.
A Commerce Department report indicated that economic growth slowed in the first quarter, but data suggested a healthy labour market as the number of Americans filing new claims for unemployment benefits increased only marginally last week.
At 8:45 a.m. ET, the S&P 500 e-minis were up 35 points, or 0.85%, while the Nasdaq 100 e-minis were up 304.25 points, or 2.23%. The Dow e-minis were down 26 points, or 0.08%.
Among other mid-cap retailers, Best Buy Co Inc (NYSE:BBY) gained 5.6% after exceeding quarterly profit forecasts for the electronics store, while Dollar Tree Inc (NASDAQ:DLTR) dropped 12.4% due to lowering its annual profit outlook.