(Reuters) -U.S. stock index futures were slightly higher on Wednesday, having clocked declines at the start of the week, with investor focus on Nvidia’s earnings later in the day which could prove to be a make-or-break moment for the AI trade.
Nvidia’s earnings, which are due after markets close on Wednesday, are seen as a litmus test for the AI-driven rally that has pushed markets to record highs this year.
Options data from analytics firm Option Research & Technology Services (ORATS) showed an implied move of about 7% for the stock in either direction after the results.
A Reuters analysis found the options-implied move would represent the largest one-day market value change following earnings for the company.
Societe Generale analysts note Nvidia’s earnings come “at a juncture of increased fragility over the outlook, with valuations under pressure as we move closer to year end”.
Shares of the AI giant inched 0.4% higher in premarket trading after falling about 4.6% in the last two sessions.
Other megacap and growth stocks traded in the flat-to-higher band, with Alphabet leading gains at a 1.5% rise.
At 05:14 a.m. ET, S&P 500 E-minis were up 17 points, or 0.26%, Nasdaq 100 E-minis were up 74 points, or 0.3%, and Dow E-minis were up 49 points, or 0.11%.
Heading into the last leg of the quarterly earnings season, results from big-box retailer Target are due before the bell on Wednesday. Rival Walmart is also scheduled to report later this week.
Concerns over high valuations and dwindling expectations of a December interest rate cut have hit the U.S. stocks’ rally off late, with the S&P 500 recording its fourth consecutive day of losses on Tuesday.
As of last close, the U.S. benchmark has dropped nearly 4.4% from its October peak and stands 12.5% higher on a year-to-date basis.
Speaking to Bloomberg News on Tuesday, Goldman Sachs Group President John Waldron said the markets are primed for possible further declines.
The S&P 500 and the Nasdaq both closed below their 50-day moving averages earlier this week, an important technical threshold, for the first time since late April.
Later in the day, minutes from the Fed’s October policy meeting – where the central bank cut rates by an expected 25-basis-points – would be on investors’ radar.
At least three Fed officials, including New York Fed President John Williams, are scheduled to speak throughout the day.
On Thursday, the September U.S. jobs report would be in focus after being delayed because of the long government shutdown, but it may do little more than confirm earlier private market surveys pointing to a cooling labor market.
Among early moving stocks, DoorDash rose 2.7% after Jefferies upgraded its rating on the online food delivery platform to “buy” from “hold”.
(Reporting by Shashwat Chauhan in Bengaluru; Editing by Krishna Chandra Eluri)
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