Upbeat Nvidia Earnings May Lead To Rally On Wall Street
22 Fevereiro 2024 - 11:03AM
IH Market News
The major U.S. index futures are currently pointing to a sharply
higher open on Thursday, with stocks likely to extend the upward
move seen late in the previous session.
The markets are likely to benefit from a positive reaction to
earnings news from Nvidia (NASDAQ:NVDA), as the chipmaker is
spiking by 12.3 percent in pre-market trading.
Nvidia is rallying after reporting better than expected fourth
quarter results amid strong demand for its chips to power
artificial intelligence. The company also provided upbeat revenue
guidance.
Shares of Nvidia have skyrocketed this year amid optimism about
demand for its AI chips, and traders had been questioning whether
its results would support further upside.
Ahead of the earnings news, Danni Hewson, head of financial
analysis at AJ Bell said Nvidia’s results could be “make or break
time for markets” and said the company needed to “smash it out of
the park and show that the AI boom still has momentum.”
The futures have seen further upside following the release of a
Labor Department report showing an unexpected dip in first-time
claims for U.S. unemployment benefits in the week ended February
17th.
The Labor Department said initial jobless claims fell to
201,000, a decrease of 12,000 from the previous week’s revised
level of 213,000.
Economists had expected jobless claims to rise to 218,000 from
the 213,000 originally reported for the previous week.
With Federal Reserve officials signaling they are not in a hurry
to begin cutting interest rates, signs of strength in the labor
market may once again be seen as a positive for the markets.
Stocks spent most of Wednesday’s session in the red but staged a
notable recovery attempt going into the close of trading. The Dow
and the S&P 500 bounced well off their worst levels and into
positive territory, although the tech-heavy Nasdaq still closed
lower for the third straight session.
While the Nasdaq fell 49.91 points or 0.3 percent to 15,580.90,
the Dow inched up 48.44 points or 0.1 percent to 38,612.24 and the
S&P 500 crept up 6.29 points or 0.1 percent to 4,981.80.
Concerns about the outlook for interest rates weighed on the
markets for much of the session, with the major averages falling to
their worst levels after the minutes of the Federal Reserve’s
latest monetary policy meeting revealed most officials remain wary
of cutting interest rates “too quickly.”
The minutes of the late-January meeting said participants
acknowledged risks to achieving the Fed’s employment and inflation
goals were moving into better balance, but they remained highly
attentive to inflation risks.
“In particular, they saw upside risks to inflation as having
diminished but noted that inflation was still above the Committee’s
longer-run goal,” the Fed said.
Most participants subsequently highlighted the risks of moving
“too quickly” to lower interest rates and emphasized the importance
of carefully assessing incoming data in judging whether inflation
is moving down sustainably to the Fed’s 2 percent target.
However, the Fed said a couple of participants pointed to
downside risks to the economy associated with maintaining an overly
restrictive stance for too long.
The late-day recovery may have reflected expectations the Fed
will still eventually cut interest rates as well as optimism ahead
of the release of fourth quarter results from Nvidia.
Despite the late-day recovery by the broader markets, networking
stocks continued to see substantial weakness, dragging the NYSE
Arca Networking Index down by 3.0 percent to its lowest closing
level in over two months.
Palto Alto Networks (NASDAQ: PANW) led the sector lower, with
the cybersecurity company plummeting by 28.4 percent after
reporting better than expected fiscal second quarter results but
lowering its forecast for full-year revenue growth.
Computer hardware and software stocks also saw considerable
weakness on the day, contributing to the lower closing by the
tech-heavy Nasdaq.
Meanwhile, natural gas stocks skyrocketed along with the price
of the commodity, resulting in a 2.8 percent surge by the NYSE Arca
Natural Gas Index.
Oil producer, utilities and oil service stocks also moved
notably higher, helping lift the markets well off their lows of the
session.
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