By Shreyashi Sanyal and Shristi Achar A
(Reuters) - Nasdaq futures jumped more than 2% on Thursday as Nvidia shares soared on a blowout forecast from the chipmaker that also helped drive an AI rally, while progress in U.S. debt ceiling talks further boosted sentiment.
Shares of Nvidia Corp, the world's most valuable listed chip company, jumped 29.8% in premarket trading.
The company expects current-quarter revenue more than 50% higher compared with 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 3% each after Nvidia's 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 chip companies including Advanced Micro Devices (NASDAQ:AMD) Inc, Micron Technology Inc (NASDAQ:MU) and Broadcom (NASDAQ:AVGO) Inc also rose between 2% and 9%.
Dow Jones Industrial Average component Intel Corp (NASDAQ:INTC), which has little AI exposure, fell 2.9%.
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 after what both sides called productive talks on Wednesday to try to reach a deal as the June 1 deadline looms large.
U.S. House Speaker Kevin McCarthy said on Thursday negotiators have made "some progress".
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.
Meanwhile, data showed a resilient labor market as the number of Americans filing new claims for unemployment benefits rose only moderately last week, while a Commerce Department report confirmed economic growth slowed in the first quarter.
At 8:45 a.m. ET, Dow e-minis were down 26 points, or 0.08%, S&P 500 e-minis were up 35 points, or 0.85%, and Nasdaq 100 e-minis were up 304.25 points, or 2.23%.
Among more mid-cap retail earnings, Best Buy Co Inc (NYSE:BBY) rose 5.6% after the electronics retailer beat quarterly profit estimates, while discount retailer Dollar Tree Inc (NASDAQ:DLTR) fell 12.4% on cutting its annual profit outlook.