Nasdaq futures rallied and chipmakers soared as a bullish sales forecast from Nvidia Corp. ignited gains in companies linked to the frenzy for artificial intelligence stocks.
(Bloomberg) — Nasdaq futures rallied and chipmakers soared as a bullish sales forecast from Nvidia Corp. ignited gains in companies linked to the frenzy for artificial intelligence stocks.
Nvidia shares soared 27% in US premarket trading after its forecast for surging revenue surprised even the most optimistic analysts on Wall Street, propelling the company to the cusp of a $1 trillion market value. Contracts on the Nasdaq 100 added 2.1% and ASM International NV led technology sector gains on the Stoxx 600 Index.
It’s another sign that investors are willing to pile into promising tech stocks, despite the growing worries about China’s economy and a potentially catastrophic US debt default. Fitch Ratings warned that the US’s AAA rating is under threat, though it still expects politicians will reach an agreement before time runs out.
Treasury-bill yields slated to mature early next month surged above 7% on Wednesday, with the rate on the June 1 and June 6 maturities increasing by more than a percentage point. Those securities are seen as most at risk of non-payment if the government exhausts its borrowing capacity. The wrangling in Washington adds to the risks assessed by Federal Reserve officials as they consider pausing interest rate increases.
Read more: Nvidia Forecast Shows How AI Frenzy Is Transforming Chip Sector
“Nvidia was last night’s good surprise,” said Gilles Guibout, head of European equity strategies at Axa Investment Managers. “But more broadly, there are few reasons for the market to keep rising: interest rates are not going down, global economic growth isn’t rebounding, full-year earnings are seen flat and stock valuations are already at a decent level.”
The company, whose shares have doubled this year, is at the forefront of an explosion in spending on artificial intelligence computing following the success of ChatGPT and other tools.
“If you look at tech it continues to reinvent itself over and over,” Larry Adam, chief investment officer at Raymond James Financial Inc, said in an interview on Bloomberg Television. “I continue to like the big tech names.”
Elsewhere, Best Buy Co. rose 4.8% ahead of regular trading in New York after topping profit estimates. Snowflake Inc. dropped 14% after the cloud-software company cut its product revenue guidance for the full year.
In Chinese markets, sentiment is continuing to worsen. The Hang Seng Index shed 1.9% on the day and the yuan broke through the closely-watched 7-per-dollar level.
The key worry for investors is that China’s economy is losing momentum and there are persistent financial troubles in the real estate industry. Recent data suggest gross domestic product growth this year will be closer to the government’s target of about 5%, contrary to expectations of a large overshoot formed earlier in the year.
Meanwhile, UK government bonds led losses in Europe. Traders added to bets the Bank of England will keep raising interest rates after an unexpectedly strong reading of UK inflation Wednesday. Money markets are now pricing more than 100 basis points of additional tightening by December.
Key events this week:
- US initial jobless claims, GDP, Thursday
- Interest rate decisions in Turkey, South Africa, Indonesia, South Korea, Thursday
- Tokyo CPI, Friday
- US consumer income, wholesale inventories, durable goods, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.7% as of 8:10 a.m. New York time
- Nasdaq 100 futures rose 2.1%
- Futures on the Dow Jones Industrial Average fell 0.2%
- The Stoxx Europe 600 rose 0.1%
- The MSCI World index fell 0.2%
- The MSCI Asia Pacific Index fell 0.7%
- The MSCI Emerging Markets Index fell 0.6%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.1% to $1.0736
- The British pound was little changed at $1.2370
- The Japanese yen was little changed at 139.34 per dollar
- The offshore yuan fell 0.2% to 7.0814 per dollar
Cryptocurrencies
- Bitcoin was little changed at $26,402.07
- Ether was little changed at $1,803.67
Bonds
- The yield on 10-year Treasuries was little changed at 3.74%
- Germany’s 10-year yield declined one basis point to 2.46%
- Britain’s 10-year yield advanced eight basis points to 4.30%
Commodities
- West Texas Intermediate crude fell 1.9% to $72.92 a barrel
- Gold futures were little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Isabelle Lee and Georgina McKay.
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