(Reuters) – U.S. stock index futures rose slightly to flat on Wednesday as investors were cautious ahead of a crucial quarterly earnings report from AI darling Nvidia to gauge whether the market can withstand further risk-taking amid a bull market.
Wall Street’s major indices have been swinging between small gains and losses since the start of the week, with the Dow hovering around record highs and the S&P 500 within 1% of a record high. Investors are awaiting the chip giant’s earnings, which are due to be announced after the market closes.
Shares of the second-most valuable company by market capitalization rose 0.4% in pre-bell trading. However, ORATS data showed that options traders are expecting a nearly 10% jump in the stock if the company reports a doubling of second-quarter revenue as expected.
Nvidia’s shares have surged nearly 160% this year, accounting for about a quarter of the benchmark index’s 18% gain. Any disappointment in the results could hurt mega-caps and other semiconductor stocks, which have led the 2024 rally on the prospect of artificial intelligence integration boosting corporate profits.
Other chip stocks such as Broadcom and Advanced Micro Devices rose slightly, as did megacaps such as Apple, Microsoft and Alphabet.
“Markets were subdued yesterday… that should change quickly from today, given Nvidia’s earnings report… which has become a major macro event in recent quarters, with reactions similar to those following surprise jobs reports or the release of the consumer price index,” Deutsche Bank analysts said.
At 5:19 a.m., the Dow E-minis were down 7 points, or 0.02%, the S&P 500 E-minis were up 4 points, or 0.07%, and the Nasdaq 100 E-minis were up 26.25 points, or 0.13%
On the macro front, sentiment favors the likelihood of the Federal Reserve cutting rates at its September meeting. The probability of a 25 basis point cut is 63.5%, while the probability of a 50 basis point cut is 36.5%, according to the CME Group’s FedWatch Tool.
Fed Chairman Jerome Powell’s support for the upcoming policy adjustment led to broad market gains last week. The Personal Consumption Expenditure report for July, due Friday, is expected to provide insight into the pace and extent of the central bank’s rate-cutting path.
Comments on the economic outlook from voting member and Atlanta Fed Chairman Raphael Bostic, expected later in the day, are being closely watched.
Investors are also awaiting earnings reports from JM Smucker, Abercrombie & Fitch and Bath & Body Works before markets open.
SentinelOne raised its annual revenue forecast, sending shares of the cybersecurity company up 1.9%, while Nordstrom rose 7.8% after the department store chain reported second-quarter profit that beat expectations.
(Reporting by Johann M Cherian in Bengaluru; Editing by Pooja Desai)
