Pullback Alert: S&P 500 Futures Ease After Nvidia’s Market Surge

U.S. stock-index futures saw a slight decline on Friday following a strong rally, driven by the positive performance of chipmaker Nvidia. This success raised hopes for a potential breakthrough in artificial intelligence.

What’s happening

  • The Dow Jones Industrial Average futures dropped by 5 points to 39,118, marking a decrease of 0.12%.
  • The S&P 500 futures ES00 declined by 2 points, indicating a 0% decrease, to hit 5096.
  • Nasdaq-100 futures (NQ00, -0.13%) fell by 27 points, representing a decrease of 0.2%, to reach 18021.

On Thursday, the Dow Jones Industrial Average rose by 457 points, a 1.18% increase reaching 39069. The S&P 500 also went up significantly by 105 points, or 2.11%, reaching 5087. Similarly, the Nasdaq Composite surged by 461 points, or 2.96%, reaching 16042.

The S&P 500 ended the day at its 12th highest level of the year, and the Nasdaq Composite was just 0.1% away from a new all-time high.

Even though they encountered difficulties, small-cap stocks also saw gains, with the Russell 2000 index increasing by 1%.

What’s driving markets

Nvidia’s stock price surged by 16% on Thursday after they reported better-than-expected fourth quarter revenue and first quarter sales outlook. As a result, Nvidia is now the third most valuable stock in the S&P 500, surpassing both Alphabet and Amazon.com. The company will likely continue to attract attention on Friday.

Investors were interested in Nvidia CEO Jensen Huang’s statement that AI had reached an important turning point.

Mark Haefele, who serves as the chief investment officer at UBS Global Wealth Management, predicts that generative AI will be the main trend in the near future. The recent earnings report from Nvidia also indicates a significant increase in investment in AI infrastructure.

During a presentation following the closing of the stock market on Thursday, Federal Reserve Governor Lisa Cook discussed the gradual and uncertain nature of the impact of AI on productivity. Cook pointed out that historical trends indicate that advancements in general-purpose technologies, like AI, can take considerable time to translate into noticeable productivity improvements. She also highlighted the importance of making additional investments and implementing changes in corporate strategies, management techniques, and employee training in order to fully harness the potential benefits of generative AI.

Cook mentioned that the current monetary policy is restrictive, but emphasized the importance of being confident that inflation will meet the 2% target before contemplating lowering interest rates.

In a speech given after the stock market closed on Thursday, Federal Reserve Governor Christopher Waller stressed that he expects it will be appropriate to begin reducing monetary stimulus at some point this year. He did mention, though, that the specific timing and magnitude of this action will depend on upcoming economic indicators.

Other companies, such as Warner Bros. Discovery and Icahn Enterprises, are set to release their earnings reports soon. Intuitive Machines experienced a rise in its stock price following the successful landing of its spacecraft on the moon and the subsequent transmission of signals to Earth.

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