By Peter Bergman (MoneyAmped.com)
U.S. futures remained subdued after a surge in both the S&P 500 and Nasdaq Composite on Wednesday. Nvidia’s market capitalization skyrockets past $3 trillion, solidifying its position as the world’s second most valuable company. This remarkable achievement highlights the immense success of the artificial intelligence chip designer. Lululemon Athletica (NASDAQ:LULU) reports stronger-than-expected first-quarter results, causing shares in the athleisure group to rise in after-hours trading.
Futures Remained Steady
U.S. stock futures remained steady on Thursday following the impressive performance of the benchmark S&P 500 and tech-heavy Nasdaq Composite, which achieved record-high closing levels in the previous session.
At 03:28 ET (07:28 GMT), the S&P 500 futures contract and Dow futures remained relatively stable, while Nasdaq 100 futures experienced a modest increase of 26 points or 0.1%.
On Wednesday, the S&P 500 experienced a notable increase of 1.18% to reach a level of 5,354.03, while the Nasdaq Composite made significant progress, rising by 1.95% to reach 17,186.38. The Dow Jones Industrial Average, consisting of 30 stocks, closed with a gain of 0.3% at a level of 38,807.33.
Backing the rally was the standard U.S. 10-year Treasury yield, which dropped to a two-month low after disappointing private payrolls data. The data, along with a separate report earlier this week indicating a decline in job opportunities to the lowest level since April three years ago, suggest a weakening in the U.S. labor market.
Reducing the need for workers may alleviate some of the inflationary pressures, raising optimism that the Federal Reserve could potentially lower interest rates from their current levels, which have not been seen in over two decades.
Nvidia Has Overtaken Apple to Become the Second Most Valuable Company in the World
Nvidia’s market value skyrocketed to over $3 trillion on Wednesday, surpassing Apple (NASDAQ:AAPL) to become the world’s second most valuable company. This remarkable achievement highlights Nvidia’s position as a leading designer of artificial intelligence chips.
The company, headquartered in California, has greatly benefited from the surge in excitement surrounding the various uses of artificial intelligence. The demand for its AI-optimized chips has skyrocketed in the past year as an increasing number of businesses invest significantly to incorporate this emerging technology into their operations.
Over this week, Nvidia made a surprising announcement on its plans for the “Rubin” chip, which came just after the company announced its most recent release. With competitors in the chipmaking industry, such as Advanced Micro Devices and Intel, stepping up their game and big cloud computing companies, such as Microsoft and Google, building their processors, the business is aiming for a regular release cycle of about one year.
Nvidia also announced another strong quarter of earnings in May, with a significant revenue increase of 262%. Additionally, they shared their plans for a stock split, which will be implemented on June 7.
Meanwhile, Apple is anticipated to reveal additional information about its AI initiatives at its highly anticipated developers conference next week. In contrast to several other major technology companies, this group has yet to be very vocal about its aspirations in the field of artificial intelligence. However, during a recent earnings call, Chief Executive Tim Cook acknowledged that this technology presents a significant opportunity for the company.
Lululemon’s Stock Experiences a Significant Surge in After-Hours Trading
Stocks in Lululemon Athletica surged by over 9% during after-hours trading following the release of their first-quarter financial results, which exceeded expectations in terms of both profit and sales.
The Canadian company, renowned for its high-end leggings, announced quarterly earnings per share of $2.54, surpassing Wall Street’s anticipated $2.38 forecast. Additionally, the company’s net revenue of $2.21 billion exceeded the projected $2.19 billion. In addition, the company raised its forecast for yearly earnings per share and reaffirmed its outlook for net revenue for the entire year.
The company experienced substantial growth in mainland China, with a significant 33% increase in same-store sales compared to the previous year. However, the Americas region saw stagnant top-line returns. Experts mentioned by Reuters pointed out that Lululemon has been expanding its footprint in China to capitalize on the relatively low level of competition in the domestic market and offset the sluggish demand from U.S. consumers who are feeling the effects of inflation.
Meanwhile, Lululemon, whose share price has experienced a significant decline of 39% this year, approved a substantial increase of $1 billion to its stock buyback program.
Anticipating the ECB’s Upcoming Decision
There is intense speculation that the European Central Bank will significantly reduce interest rates at its upcoming meeting on Thursday.
Policymakers have essentially hinted at their decision leading up to the meeting, which is encouraging given signs that inflation in the eurozone currency area is gradually approaching the ECB’s desired 2% target.
In May, Christine Lagarde, the President of the ECB, expressed her confidence that price pressures are well-managed, significantly as the effects of the energy crisis and supply chain limitations diminish. Philip Lane, the Chief Economist of the central bank, also mentioned in an interview with the Financial Times that officials believe there is sufficient evidence in recent data to ease the highest level of restrictions unless there are any significant unexpected developments.
Traders are speculating that the ECB will decrease its benchmark deposit rate, currently at a record-breaking 4%, by 0.25 percentage points. However, there is still some uncertainty regarding how policymakers will address possible future reductions later this year. Analysts at ING have expressed skepticism in a note, stating that they do not believe the ECB will have much to comment on the matter.
Crude Sees an Increase in Value
Crude prices inched up on Thursday, fueled by the overall optimistic sentiment, but remain on track for significant weekly declines.
At 03:24 ET, the U.S. crude futures (WTI) increased 0.7% to $74.60 per barrel, while the Brent contract rose 0.6% to $78.88 a barrel.
Both contracts are on track to experience weekly declines of approximately 4%. This is as a result of the recent decision by the Organization of the Petroleum Exporting Countries and its allies, which permits a gradual unwinding of voluntary output cuts starting in October.
The U.S. Energy Information Administration’s report that U.S. crude inventories increased by 1.2 million barrels in the week ending May 31 in contrast to expectations for a decrease of 2.3 million barrels had an additional impact on the crude market.
