U.S. stock futures are signaling a higher open on Thursday, with investors poised to extend the upward momentum seen over recent sessions.
The positive sentiment surrounding artificial intelligence is lending support to technology stocks, as reflected by a 0.6% advance in Nasdaq 100 futures.
AI-focused leaders like Nvidia (NASDAQ:NVDA) are climbing 1.4% in pre-market trading, while Advanced Micro Devices (NASDAQ:AMD) and Broadcom (NASDAQ:AVGO) are surging 3.2% and 3.5%, respectively.
The strength in AI stocks comes amid reports that OpenAI has completed a share sale placing the company’s valuation at $500 billion.
By selling roughly $6.6 billion worth of stock, current and former employees have pushed the ChatGPT owner past Elon Musk’s SpaceX as the world’s most valuable privately held firm.
“Reports suggest there was appetite for nearly twice as many as the actual number of shares on offer,” said Russ Mould, investment director at AJ Bell.
Optimism surrounding AI may also help investors overlook concerns about the economic impact of the ongoing U.S. government shutdown.
Because of the shutdown, reports on weekly jobless claims and factory orders scheduled for Thursday have been indefinitely postponed.
Stocks initially came under pressure early on Wednesday but staged a strong recovery over the trading session. The major indexes climbed well off their lows, finishing the day in positive territory.
The Nasdaq rose 95.15 points, or 0.4%, to 22,755.16, the S&P 500 added 22.74 points, or 0.3%, to 6,711.20, and the Dow gained 43.21 points, or 0.1%, to 46,441.10.
With the rebound, the major indexes posted gains for a fourth consecutive session, with the Dow and S&P 500 closing at record highs.
The initial pullback followed the official U.S. government shutdown early Wednesday after Congress failed to pass a temporary spending bill.
Democrats have insisted that any stop-gap funding include extended Obamacare tax credits, while Republicans argue the matter should be addressed after a funding bill is approved.
Early selling pressure was partially offset by optimism around interest rates following the release of private-sector employment data.
Although Friday’s Labor Department monthly jobs report is likely delayed due to the shutdown, ADP released its private payroll data, showing a surprising decline of 32,000 jobs in September. August data was revised downward to a loss of 3,000 jobs.
Economists had anticipated an increase of 50,000 private-sector jobs versus the 54,000 initially reported for August.
Bill Adams, Chief Economist for Comerica Bank, said the ADP report “could have outsize influence on the Federal Reserve’s next interest rate decision if the shutdown lasts long enough to keep the Fed from seeing the September jobs report before their next meeting later this month.”
The market rebound also reflects analysts’ observation that government shutdowns historically have limited impact on equities.
“On average, the S&P 500 has historically been about flat during shutdowns, with a slightly higher probability of gains vs. losses since 1976,” said Jeff Buchbinder, Chief Equity Strategist for LPL Financial.
He added, “Considering that most of the losses came during the late 1970s, and the biggest decline during a shutdown since 1980 was 2.2%, history suggests stocks have a good chance of going higher during this shutdown, though past performance does not guarantee future results.”
Pharmaceutical stocks extended their rally from the previous session, pushing the NYSE Arca Pharmaceutical Index up 5.4% to its highest close in nearly seven months.
Computer hardware stocks also performed strongly, with the NYSE Arca Computer Hardware Index surging 3.9% to a record closing high.
Biotech shares followed suit, as the NYSE Arca Biotechnology Index rose 3.2% to a record close amid broad strength in the sector.
Healthcare, semiconductor, and steel stocks showed solid gains, while airline and financial shares experienced notable declines.
Advanced Micro Devices stock price
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