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U.S. stocks mainly rise; tech sector leads the way on Nvidia eheer

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Investing.com– U.S. stock index futures rose Thursday, with the tech sector leading the way after positive earnings and guidance from AI leader Nvidia. 

At 06:25 ET (10:25 GMT), Dow Jones Futures rose 55 points, or 0.1%, S&P 500 Futures climbed 30 points, or 0.6%, while the tech-heavy Nasdaq 100 Futures soared 175 points, or 0.9%. 

Nvidia surges on positive Q1, boosts tech sector 

Sentiment has received a boost with the release of strong numbers from Nvidia (NASDAQ:NVDA), with the chipmaker widely considered a bellwether for tech and artificial intelligence demand.

Its stock rallied more than 6% in premarket trade, reaching a record high after its first quarter earnings blew past estimates. The firm also offered up a stronger-than-expected revenue forecast for the current quarter, as it continued to benefit from strong demand in the growing AI industry. 

Nvidia also announced a 10-for-one forward stock split. 

The chipmaker’s earnings signaled that demand from the AI industry remained strong, which in turn boosted shares of other major chipmakers. Peers Advanced Micro Devices (NASDAQ:AMD) and Broadcom (NASDAQ:AVGO) rose about 2% each, while memory chip maker Micron Technology (NASDAQ:MU) rose 3% and chip designer Arm Holdings (NASDAQ:ARM) rose nearly 4% premarket. 

Fed jitters limit optimism

But while positive earnings from Nvidia heralded gains for tech stocks, broader equities remained skittish amid growing concerns over that interest rates will remain elevated for longer than expected, especially after repeated warnings from the Fed on sticky inflation.

The minutes of the central bank’s meeting cemented fears that the Fed was growing less confident that inflation was moving sustainably back towards its 2% annual target.

A string of Fed officials also echoed this notion in recent weeks. While markets were still holding out hope for a September rate cut, future inflation readings are likely to determine the possibility of such a scenario.

Adding to concerns, Goldman Sachs CEO David Solomon said he did not expect any rate cuts in 2024. 

The main Wall Street indexes closed lower on Wednesday amid this angst. The S&P 500 fell 0.3%, the NASDAQ Composite dropped 0.2%, and the Dow Jones Industrial Average fell 0.5%, with all three averages falling from record highs hit earlier in the week. 

Live Nation sinks on report of DOJ lawsuit 

There was more corporate news to digest, outside of Nvidia’s earnings, with Live Nation Entertainment (NYSE:LYV) stock sinking 6% premarket on a report that the Department of Justice was planning a lawsuit against the firm over allegedly monopolistic practices by its Ticketmaster unit, and that lawmakers were also seeking a separation of Ticketmaster from the firm. 

News Corp (NASDAQ:NWSA) rose 2% after the news giant signed a content sharing deal with OpenAI, granting the latter access to content from several of its biggest publications.

Crude rebounds after a series of losses 

Crude prices rose, with traders seizing on the risk-on sentiment after a series of losses.

By 06:25 ET, the U.S. crude futures (WTI) traded 0.9% higher at $78.25 per barrel, while the Brent contract climbed 0.8% to $82.58 a barrel.

Both benchmarks fell more than 1% Wednesday, the third negative session in a row, as the Fed minutes pointed to U.S. interest rates remaining at elevated levels for some time. Higher interest rates increase borrowing costs, possibly placing a crimp on economic growth and oil demand in the world’s largest crude consuming nation.

Also denting sentiment were U.S. crude stocks, which rose by 1.8 million barrels last week, according to the Energy Information Administration. Analysts had estimated a 2.5 million-barrel draw.

(Ambar Warrick contributed to this article.)

 

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