Futures pause after tech-led rally; Nvidia continues to climb
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[June 06, 2024] By
Lisa Pauline Mattackal and Johann M Cherian
(Reuters) -The S&P 500 and the Dow futures were little changed on
Thursday as investors awaited fresh data to gauge the U.S. labor market
strength, while the Nasdaq futures inched higher as gains in AI-favorite
Nvidia boosted optimism around the tech sector.
A tech rally on Wednesday drove the S&P 500 and the Nasdaq to all-time
highs, as a string of weakening economic data boosted bets that the
Federal Reserve could start easing policy sooner than previously
expected.
Megacap tech stocks were the main driver of the rally, with the tech
sector gaining nearly 2.6% as Treasury yields eased. Stocks including
Meta Platforms, Microsoft and Apple were down between 0.04% and 0.3% in
premarket trading.
However, chip maker Nvidia was up 1.5%, after crossing $3 trillion in
market valuation in the previous session that saw it overtake Apple as
the world's second most valuable company.
Gains in Nvidia and other AI-related players have been the primary
driver of Wall Street's recent rally, with the chipmaker accounting for
roughly a third of the S&P 500's over 12% year-to-date gains, even as
investors have grappled with worries about higher-for-longer U.S.
interest rates.
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"We anticipate the semiconductor-led AI rally will broaden in the second
half of this year and beyond, and we continue like big tech and key AI
segments such as GPUs, custom chips and foundries, and semi-cap
equipment," analysts at UBS wrote in a note.
On the macro front, May private payrolls data on Wednesday suggested an
easing in labor market tightness, ahead of the crucial nonfarm payrolls
report due Friday.
Traders now see a nearly 67% chance of a September rate reduction,
according to the CME's FedWatch tool, and have priced in about two cuts
this year, as per data from LSEG.
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Traders work on the floor at the New York Stock Exchange (NYSE) in
New York City, U.S., June 3, 2024. REUTERS/Brendan McDermid
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Forecasters polled by Reuters also expect two cuts, but there is a
significant risk that the Fed would opt for only one or none at all.
Data on weekly jobless claims data and April's international trade
figures are due later on Thursday.
At 7:08 a.m. ET, Dow e-minis were down 18 points, or 0.05%, S&P 500
e-minis were up 0.5 points, or 0.01%, and Nasdaq 100 e-minis were up
17.75 points, or 0.09%.
Among others, Lululemon Athletica leapt 8.2% after beating
expectations for first-quarter profit and revenue on Wednesday, as
its China-based business helped offset slowdowns in North America.
U.S.-listed shares of Nio dropped 7.2% after the Chinese electric
vehicle maker posted a quarterly net loss and said it expected its
EV deliveries in the second quarter to more than double from a year
ago.
Victoria's Secret lost 1.8% after posting lower first-quarter profit
and revenue after markets closed Wednesday.
Five Below slumped 15.8% after the discount store operator trimmed
its annual net-sales forecast.
Sealed Air rose 1.4% after brokerage Mizuho upgraded the stock to
"buy" from "neutral".
(Reporting by Lisa Mattackal and Johann M Cherian in Bengaluru;
Editing by Shinjini Ganguli)
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