U.S. stock index futures took a breather on Friday after a stunning rally in the previous session, spurred by upbeat results from AI poster child Nvidia that renewed enthusiasm about artificial intelligence. The S&P 500 and Dow Jones Industrial Average surged to record closing highs on Thursday, while the tech-heavy Nasdaq was a whisker away from its all-time high. Investors piled into technology stocks with the AI-fueled frenzy on Wall Street gaining more steam.
On Thursday, Nvidia experienced an unprecedented surge, adding a staggering $277 billion in stock market value, marking the largest one-day gain in Wall Street’s history. This remarkable feat propelled Nvidia’s shares to rise by 1.8% in premarket trading on Friday, bringing the company tantalizingly close to achieving a market value of $2 trillion for the first time ever.
Analysts, including Ipek Ozkardeskaya from Swissquote Bank, observed that while the markets are currently in a consolidation phase after the extraordinary rally, the momentum fueled by artificial intelligence (AI) is anticipated to persist throughout the year. Ozkardeskaya highlighted the significant growth in earnings accompanying the surge in valuations, indicating a strong fundamental support for the ongoing technology rally.
The robust performance of corporate earnings in the fourth quarter further bolsters investor confidence. According to data from LSEG, a notable 78.5% of the 437 companies in the S&P 500 that have reported earnings thus far have exceeded estimates. This surpasses the annual average of 76%, underscoring the resilience and strength of the corporate sector despite prevailing market uncertainties.
On Friday, most megacap stocks saw subdued movements, with Tesla, Amazon.com, and Apple experiencing slight declines ranging from 0.3% to 0.9%. However, amidst this mixed performance, futures pointed to a relatively stable opening for the major indexes. At 07:00 a.m. ET, Dow e-minis were up 39 points (0.1%), S&P 500 e-minis were up 1.75 points (0.03%), and Nasdaq 100 e-minis were down 8.75 points (0.05%).
Despite the subdued start to the day, all three major indexes were on track to post weekly gains, rebounding from the turbulence observed in the previous week. The prior week’s volatility was primarily driven by hotter-than-expected inflation data, which tempered expectations of early interest rate cuts from the U.S. Federal Reserve.
Traders, responding to comments from Fed Governor Christopher Waller, solidified their bets against any U.S. interest rate cuts before June, as Waller emphasized that he was in “no rush” to lower rates.
In company news, Carvana witnessed a significant surge of 30.7% after reporting its first-ever annual profit, bolstered by its agreement with bondholders to reduce outstanding debt by $1 billion. Conversely, Super Micro Computer saw a decline of 5% following the announcement of the pricing of $1.5 billion convertible senior notes.
Meanwhile, Jack Dorsey-led Block experienced a notable increase of 15.4% after the payments firm provided a positive forecast for adjusted core earnings in the current quarter, surpassing Wall Street estimates. This optimistic outlook reflects Block’s confidence in consumer resilience amidst ongoing market challenges.