By Shreyashi Sanyal and Shristi Achar A
(Reuters) - Nasdaq futures jumped nearly 2% on Thursday as Nvidia shares soared on a blowout forecast from the chipmaker that helped drive an AI rally, while U.S. debt ceiling talks showed signs of progress boosting sentiment.
Shares of Nvidia Corp, the world's most valuable listed chip company, jumped 27.6% in premarket trading.
The chip designer forecast current-quarter revenue more than 50% higher Wall Street estimates and said it was ramping up supply to meet surging demand for its artificial-intelligence chips used to power ChatGPT and similar services.
Heavyweight AI players such as Microsoft Corp (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) Inc rose about 2.5% each after Nvidia's upbeat forecast.
"The word of the month is AI," said Sam Stovall, chief investment strategist at CFRA Research in New York. "Investors are just looking for any area of growth and right now that happens to be semiconductors."
Other semiconductor companies including Advanced Micro Devices (NASDAQ:AMD) Inc, Micron Technology Inc (NASDAQ:MU) and Broadcom (NASDAQ:AVGO) Inc also rose between 2% and 9%.
Intel Corp (NASDAQ:INTC), which has little AI exposure, fell 1.9%.
Wall Street's main indexes have dropped sharply in the last two sessions and could log their worst week in more than two months as investors await clarity on whether lawmakers will strike a deal to raise the nation's $31.4 trillion debt ceiling or risk a calamitous default.
Later in the day, the White House and congressional Republicans will resume negotiations over raising the debt ceiling after what both sides called productive talks on Wednesday to try to reach a deal as the June 1 deadline loomed.
Reflecting the market uncertainty, yields on U.S. Treasury bills maturing in early June rose above 7%, while two-year yields hit their highest since March after ratings agencies Fitch and DBRS Morningstar put the United States on credit watch for a possible downgrade. [US/]
"It's appropriate for debt rating agencies to put the U.S. credit rating on negative watch, its basically saying if you can't keep your financial house in order then you probably should not be given the highest credit rating," Stovall added.
Investors will also watch Federal Reserve speakers and economic data due later in the day, including second estimate for the first-quarter gross domestic product (GDP) and weekly jobless claims, to gauge the impact of the central bank's monetary policy on the American economy.
At 7:36 a.m. ET, Dow e-minis were down 123 points, or 0.37%, S&P 500 e-minis were up 21.25 points, or 0.52%, and Nasdaq 100 e-minis were up 255.5 points, or 1.87%.
Among more mid-cap retail earnings, Best Buy Co Inc (NYSE:BBY) rose 5.0% after the electronics retailer beat first-quarter profit estimates.
Discount store operator Dollar Tree Inc (NASDAQ:DLTR) slumped 10.7% on cutting its annual profit outlook.