US stock index futures edged higher on Thursday evening as weakness in the tech sector dwindled after second-quarter earnings from major chipmaker Nvidia Corp. signaled the ongoing support of artificial intelligence (AI) in semiconductor demand.
September contract S&P 500 Futures gained 0.20% to 5,621.50 points, while the Nasdaq 100 futures added 0.36% to 19,464.00 points. Dow Jones Futures rose 0.04% to 41,454.00 points.
Shares in the Santa Clara, California-based company recovered by 0.77% in after-hours trading following a more than 6% loss due to underwhelming revenue and gross margin estimates for the third quarter.
Still, analysts remained largely optimistic about the stock after the AI darling topped earnings expectations. Tech stocks have also mostly rebounded, as the semiconductor giant’s earnings for the three months ending July 28 showed the persistence of AI-driven demand.
PCE Inflation Data in Focus for Fed Rate Cut Cues
Wall Street stocks also traded near record highs on increased bets of interest rate cuts from the Federal Reserve.
Investors will now turn their attention to the central bank’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index data for July, set to be released later in the day.
The reading is expected to show a small jump to 2.6% from 2.5% in June, while inflation in the world’s largest economy is seen to stay higher than the Fed’s 2% annual target.
Markets continue to consider the possibility of a rate reduction in the coming month after Fed officials acknowledged that the US economy seemed to have slowed down and price pressures were easing. Still, the dovish cues may change on indications of sticky inflation persisting.
A potential inflation surge might trim the September rate cut forecasts to 25 basis points (bps). The CME FedWatch tool showed that traders are pricing in a 68% likelihood for 25 bps reduction and a 32% probability for 50 bps.
Preliminary US gross domestic product (GDP) data published on Thursday read a 3.0% growth in the second quarter. That was compared to the 1.4% rise in the previous quarter and the 2.8% projected.
Initial jobless claims in the country fell slightly by 231,000 in the week ending August 24 from the 233,000 posted in the week earlier.
A strong US economy reinforces the case of mild interest rate cuts for the Fed, although it has also raised the potential for a soft landing.
