Nasdaq futures rallied as a strong outlook from Nvidia Corp. gave fresh impetus to the artificial intelligence hype that’s boosting tech stocks this year.
(Bloomberg) — Nasdaq futures rallied as a strong outlook from Nvidia Corp. gave fresh impetus to the artificial intelligence hype that’s boosting tech stocks this year.
Contracts on the tech-heavy Nasdaq 100 rose 0.9%, with Nvidia advancing 6.7% in premarket trading after delivering a third straight sales forecast that beat analysts’ estimates.
Sentiment elsewhere was a bit more muted after former Federal Reserve Bank of St. Louis President James Bullard said a reaccelerating US economy could prompt higher rates. Data also showed US jobless claims came in below median expectations. S&P 500 futures trimmed some gains and Europe’s Stoxx 600 erased an advance.
Nvidia’s update, along with the AI stock frenzy, are punctuating a week that’s seen broad equity-market gains and renewed risk taking by investors. While worries about rising bond yields dominated the conversation last week, mega-cap tech is back in focus as investors gauge whether their earnings can power a stock market that’s been treading water for the past month.
“Nvidia has shown that the demand for AI technology remains strong despite what is going on elsewhere,” said Stuart Cole, chief macro economist at Equiti Capital in London. “The potential remains for equity markets to soften again. But I can easily see AI-related stocks, like Nvidia, and tech shares probably more generally, being seen as a safe haven in the equity world.”
Next in focus will be the gathering of top central bankers at Jackson Hole, with Federal Reserve Chair Jerome Powell’s speech due Friday. Treasuries and German bunds edged lower, after Wednesday’s broad rally in bonds spurred by weak economic data. Gilts rose, led by the 10-year, and money markets pared wagers on further Bank of England tightening for a third day.
Among equities, the MSCI Emerging Markets Index was on track for for its biggest gain in a month, with investors also taking bullish cues from news that leaders from Brazil, Russia, India, China and South Africa agreed to expand their BRICS group to give it more economic clout. Europe’s Stoxx 600 trimmed earlier gains, but was still on track for a fourth straight advance.
Nvidia said sales will be about $16 billion in the three months ending in October, blowing past analysts’ estimate of $12.5 billion. The outlook underscores Nvidia’s role as the key beneficiary of the AI computing boom. Faced with skyrocketing demand for chatbots and other tools, data center operators are stocking up on the company’s processors, which are adept at handling the heavy workloads AI requires.
“The results are very strong and indicate robust demand for AI processors and infrastructure,” said Janet Mui, head of market analysis at RBC Brewin Dolphin.
Pockets of concern remain for global investors. China’s $2.9 trillion trust industry is showing signs of strain, adding further pressure on the economy, while insiders are also worried that efforts to improve the health of local government financing vehicles may not play out as hoped.
Elsewhere, the Turkish lira rallied after the country’s central bank raised interest rates to a near two-decade high, in the first sign that a new lineup of monetary officials favors more aggressive moves to curb inflation running near 50%.
In commodities, European natural gas prices tumbled on signs that a labor dispute at Australia’s biggest liquefied natural gas export plant will be resolved, easing fears about one of three possible strikes in the key exporting nation.
Key events this week:
- Kansas City Fed’s annual economic policy symposium in Jackson Hole begins, Thursday
- Japan Tokyo CPI, Friday
- US University of Michigan consumer sentiment, Friday
- Fed Chair Jerome Powell, ECB President Christine Lagarde to address Jackson Hole conference, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.4% as of 8:34 a.m. New York time
- Nasdaq 100 futures rose 0.9%
- Futures on the Dow Jones Industrial Average fell 0.2%
- The Stoxx Europe 600 was little changed
- The MSCI World index rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro fell 0.3% to $1.0832
- The British pound fell 0.6% to $1.2650
- The Japanese yen fell 0.6% to 145.74 per dollar
Cryptocurrencies
- Bitcoin fell 0.7% to $26,406.18
- Ether fell 0.9% to $1,668.3
Bonds
- The yield on 10-year Treasuries advanced four basis points to 4.23%
- Germany’s 10-year yield advanced one basis point to 2.53%
- Britain’s 10-year yield declined two basis points to 4.45%
Commodities
- West Texas Intermediate crude was little changed
- Gold futures fell 0.3% to $1,942.60 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson and Lynn Thomasson.
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