Technology stocks led U.S. stock futures higher on Monday, attempting to revive a rally that had stalled due to doubts about an interest rate cut by the Federal Reserve, while investors awaited this week's important monthly jobs report.
Nasdaq futures rose 0.7%, while S&P 500 futures climbed 0.4%. Dow Jones Industrial Average futures, which include fewer technology stocks, traded virtually unchanged.
The Nasdaq experienced a volatile period, ending last week lower after tech giants like Alphabet, Amazon, Broadcom, and Meta lost momentum. Despite this, the S&P 500 and Dow Jones managed to finish the week slightly higher, despite sharp declines on Thursday.
The return of full economic data to its normal schedule following the government shutdown remains uncertain. However, investors will get their first official government reading of the labor market this week with the September jobs report due on Thursday. This report will offer a relatively delayed picture of the US labor market, at a time when Federal Reserve officials have raised concerns about the upcoming interest rate decision.
Nvidia results
This week also sees the release of one of the last major earnings reports of the quarter, particularly those related to artificial intelligence. Nvidia is set to announce its results on Wednesday, an event always closely watched by the markets. Investors will also get a clearer picture of consumer spending strength with reports from major companies, led by Walmart. Other companies reporting this week include Home Depot, Target, Lowe's, and Gap.
Markets are awaiting Nvidia's quarterly report this week, as the company is the world's largest in the artificial intelligence sector and a major driver of technology stocks on Wall Street. The company's results, expected Wednesday evening, will set market trends, as any slowdown in growth or negative comments could lead to further declines in AI stocks.
Nvidia's stock has surged nearly 1,000% since the launch of ChatGBT in November 2022, and has seen gains exceeding 40% since the beginning of the year, making it the first company to surpass a $5 trillion market capitalization last month. This market weighting means that the stock's movements directly impact stock indices, with the company holding an 8% weighting in the S&P 500 and nearly 10% in the Nasdaq 100.
Analysts expect earnings per share to rise 53.8% year-over-year in the fiscal third quarter, with revenue reaching $54.8 billion. Investors will be focused on comments regarding demand and capital expenditures, particularly as major companies like Microsoft and Amazon continue to expand their data centers and artificial intelligence infrastructure without slowing down.
Volatility returns to US indices
The Nasdaq ended last week down 0.5%, weighed down by declines in shares of Alphabet, Amazon, Broadcom, and MetaTrader. In contrast, both the Dow Jones and the S&P 500 posted modest gains despite sharp losses on Thursday.
Tom Lee, head of research at Fundstrat, wrote that the team had anticipated a volatile first half of November, and that now appears to be the case. He noted that while some concerns, such as the government shutdown and the New York mayoral race, have subsided, others remain.
He added that forecasts nevertheless indicate that the current wave of volatility will give way to a new upward wave, which could add about 200 points and push the Standard & Poor's index above the 7,000-point level.
