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Dow futures fall 60 pts after Fitch warning; Nvidia powers tech sector higher

Published 05/25/2023, 07:14 PM
© Reuters.

Investing.com -- U.S. stocks are seen opening in a mixed fashion Thursday with increased fears over a debt default weighing, but an upbeat earnings report from chipmaker Nvidia is seen powering the tech sector higher.

At 06:50 ET (10:50 GMT), the Dow Futures contract was down 60 points or 0.2%, while S&P 500 Futures traded 25 points or 0.6% higher and Nasdaq 100 Futures climbed 240 points or 1.8%.

The major indices closed lower Wednesday, with the blue-chip Dow Jones Industrial Average dropping over 250 points or 0.8%, the broad-based S&P 500 falling 0.7%, and the Nasdaq Composite down 0.6%.

This followed the stalling in debt ceiling negotiations over spending levels, with the June 1 deadline when the government runs out of options to continue paying its obligations fast approaching.

The uncertainty surrounding these talks prompted rating agency Fitch to put the United States' prized "AAA" credit rating on watch for a possible downgrade, saying that "brinkmanship" over the debt ceiling represents a large downside risk to trust in the country's ability to pay back its debts, even if the chances of default are low.

This move revived memories of 2011 when S&P downgraded the United States to "AA-plus," an event that resulted in a sharp stock market selloff.

That said, the tech-heavy Nasdaq Composite is seen opening sharply higher Thursday following strong premarket gains from Nvidia (NASDAQ:NVDA), the world's most valuable semiconductor firm.

The U.S. graphics card giant posted larger-than-expected first quarter profits and offered upbeat second quarter revenue guidance, seeing a jump in sales of its data center chips, which play a central role in powering artificial intelligence technology that has seen a spike in popularity this year.

More earnings are due from warehouse club Costco (NASDAQ:COST) and discount retailer Dollar Tree (NASDAQ:DLTR) as well as Workday (NASDAQ:WDAY), the maker of financial and human resources software.

Also of interest will be the second reading of gross domestic product for the first quarter, which is expected to confirm that the U.S. economy expanded 1.1% from the prior quarter, and the weekly initial jobless claims, which should confirm a resilient labor market.

Oil prices fell Thursday, retreating from three-week highs amid growing pressure from a strong dollar, making crude more expensive for international buyers, as uncertainty surrounding the U.S. debt ceiling negotiations mounted.

Comments from Russian Deputy Prime Minister Alexander Novak also tempered expectations that a group of top producers will slash output at its upcoming meeting.

Novak said that he did not believe there will be "any new steps" taken at the June 4 gathering of the Organization of Petroleum Exporting Countries and its allies.

By 06:50 ET, U.S. crude futures traded 2% lower at $72.84 a barrel, while the Brent contract dropped 1.8% to $76.91.

Both benchmarks rallied nearly 2% on Wednesday after official data showed U.S. crude inventories sank by more than expected in the past week.

Additionally, gold futures fell 0.1% to $1,962.90/oz, while EUR/USD traded 0.2% lower at 1.0724.

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