Futures edge higher after Nvidia results; focus moves to upcoming data

By Johann M Cherian

(Reuters) -Nasdaq and S&P 500 futures pared early losses and edged higher on Thursday after AI chip firm Nvidia's largely in-line forecasts, while markets remained hopeful of upcoming interest rate cuts with economic data on tap later in the day.

The chip bellwether's shares fell 2% in premarket trading following largely in-line revenue and gross margin forecasts for the current quarter.

"Here's the issue, the size of the beat this time was much smaller than we've been seeing. Even future guidance was raised, but again not by the tune from previous quarters," said Ryan Detrick, chief market strategist at Carson Group.

"Nvidia is a great company that is still growing revenue at 122%, but it appears the bar was just set a tad too high this earnings season."

Semiconductor peers Broadcom and Advanced Micro Devices fell 0.3% each.

However, the declines were limited by gains in Nvidia's heavyweight megacap customers, which have been the focus of market euphoria on the prospect of artificial intelligence integration boosting corporate profits.

Microsoft rose 0.6%, Meta added 0.8% and Alphabet and Amazon.com rose more than 1% each, while Apple gained 1.2%.

Yields on Treasury bonds also dipped.

At 06:11 a.m. ET, Dow E-minis were up 209 points, or 0.51%, S&P 500 E-minis were up 17.25 points, or 0.31%, and Nasdaq 100 E-minis were up 80 points, or 0.42%.

Markets have seesawed between marginal gains and losses in the run-up to Nvidia's results, as traders waited to see if the company would sustain its unmatched revenue growth. There was also nervousness about what its earnings could mean for the trajectory of highly valued AI-related stocks.

The benchmark S&P 500 is 1.3% from a record high, while the Dow is hovering around an all-time peak, with expectations for an interest rate cut in the U.S. Federal Reserve's upcoming September meeting staying robust.

Odds of a reduction of 25 basis points in September stand at 63.5%, while those of a larger 50 bps are at 36.5%, according to CME Group's Fed Watch Tool.

Focus will now shift to the second estimate of U.S. gross domestic product for the second quarter and weekly jobless claims data, both due at 8:30 a.m. ET.

The reports along with Friday's Personal Consumption Expenditure data for the month of June could offer hints on the central bank's monetary policy easing trajectory.

Among other movers, Dow-component Salesforce beat Wall Street expectations for second-quarter results, sending the enterprise cloud firm's shares up 5.4%.

CrowdStrike dropped 2.4% after the cybersecurity company cut its revenue and profit forecasts in the aftermath of last month's global tech outage.

(Reporting by Purvi Agarwal and Johann M Cherian in Bengaluru; Editing by Pooja Desai and Shounak Dasgupta)