Dow Jones futures advance on upbeat Nvidia results, Fed cut hopes

Dow Futures rise 0.3% as the market digests Nvidia's quarterly earnings data.

The chipmaker's earnings beat forecasts, easing concerns of an overvaluation of the AI sector.

Market expectations of Fed cuts in September are providing additional support for equities.

Dow Jones futures are trading 0.3% higher a few hours ahead of the US market opening on Thursday. Positive earnings figures from the AI bellwether Nvidia and market hopes of Fed easing in September are fuelling a moderate risk appetite.

On Wednesday, chipmaker Nvidia reported quarterly results with revenues of USD 46.74 billion in the second quarter, beating expectations of USD 46.06 billion. The company also forecasted sales growth above 50% for this quarter, to ease fears about an excessive valuation of AI firms.

More specifically, the lower-than-expected data centre revenue and uncertainty about exports to China triggered an immediate adverse reaction, which later faded.

Fed easing hopes fuel demand for equities

Furthermore, Fed Williams fueled hopes of a September rate cut, affirming that interest rates will come lower at some point, and that, in his view, every monetary policy meeting is "live" for interest rate adjustments.

Futures markets are now pricing in an 87% chance of a rate cut in September, up from 75% last week. Hopes of easier financing conditions are supporting investors' appetite for stocks, although the risk sentiment is likely to remain in check ahead of Friday's PCE Prices Index release.

Investors will be looking at PCE inflation for further clues about the outcome of September's meeting. The market consensus points to a steady headline inflation figure, at a 2.6% yearly rate, with the core inflation accelerating to 2.9% from 2.8% in June.