Investors Eye Nvidia Earnings Amid AI Sector's Surge

U.S. stock futures were slightly up as investors await Nvidia's key earnings report. Nvidia's performance is expected to greatly influence global equities, given its significant role in the AI industry. Optimistic data from other companies in the AI sector and potential Federal Reserve rate cuts have buoyed market sentiment.

U.S. stock index futures saw minor gains on Tuesday as investors eagerly awaited Nvidia's earnings report. Anticipation for policy easing remains strong, and key economic data is due later in the week.

Monday saw the S&P 500 and Nasdaq take a break from their previous rally. Investors shifted focus to Nvidia, whose AI-related chips have driven recent market gains. Nvidia shares were up 0.5% ahead of Wednesday's report, which is expected to show a significant revenue increase. However, a miss could negatively impact shares.

Concerns linger over Nvidia meeting high expectations, as well as AI spending by its largest clients. Peter Garnry, chief investment strategist at Saxo, highlighted the importance of Nvidia's earnings for global equities.

Investors are optimistic, citing strong results from other AI companies. Chip stocks like Broadcom and Advanced Micro Devices also saw gains. Market sentiment was further boosted by Federal Reserve Chair Jerome Powell's comments supporting lower borrowing costs next month.

The Dow reached a record high, with S&P 500 close to its own milestone. Traders predict a 71.5% chance of a 25-basis point rate cut in September. The next anticipated economic indicator is the July Personal Consumption Expenditure data, which could define future rate policies.

However, UBS Global Wealth Management raised the U.S. recession odds to 25%, attributing it to revised job growth estimates and weak July labor reports. Meanwhile, Paramount Global shares dropped 2.5% as Edgar Bronfman Jr exited the bid for the company, clearing the path for Skydance Media's control.

(With inputs from agencies.)