US stock futures steady ahead of Nvidia test

U.S. stock index futures edged higher on Wednesday following sharp early-week losses on Wall Street, as investors set their eyes on Nvidia's earnings which could prove to be a make-or-break moment for the AI trade.

Nvidia's earnings, due after markets close on Wednesday, are seen as a litmus test for the AI-driven rally that has pushed markets to record highs this year. But recently the rising market came under scrutiny on questions around monetization and circular spending within the industry.

Options data from analytics firm Option Research & Technology Services (ORATS) showed an implied move of about 7% for the Nvidia stock in either direction after its results.

A Reuters analysis found the options-implied move would represent the largest one-day market value change following earnings for the company.

Societe Generale analysts note Nvidia's earnings come "at a juncture of increased fragility over the outlook, with valuations under pressure as we move closer to year end".

Shares of the AI giant gained 1.4% in premarket trading after falling about 4.6% in the last two sessions.

Other megacap and growth stocks traded in the flat-to-higher band, with Alphabet leading gains with a 1.8% rise.

At 7:14 a.m. ET, Dow E-minis were up 56 points, or 0.12%, S&P 500 E-minis were up 22.75 points, or 0.34%, and Nasdaq 100 E-minis were up 106.75 points, or 0.43%.

Heading into the last leg of the quarterly earnings season, results from big-box retailer Target showed a bigger-than-expected drop in quarterly sales with cash-strapped U.S. consumers pulling back on discretionary spending. Its shares dropped 2.1%. Rival Walmart is scheduled to report later this week.

Lowe's shares gained 5.2% after the home improvement retailer posted third-quarter profit above expectations. Rival Home Depot cut its annual forecasts on Tuesday amid consumer concerns over cost of living.

Worries over high valuations and dwindling expectations of a December interest rate cut have weighed on the markets of late, with the S&P 500 recording its fourth consecutive day of losses on Tuesday.

As of last close, the U.S. benchmark has dropped nearly 4.4% from its October peak and stands 12.5% higher on a year-to-date basis.

Speaking to Bloomberg News on Tuesday, Goldman Sachs Group President John Waldron said the markets are primed for possible further declines.

The S&P 500 and the Nasdaq both closed below their 50-day moving averages earlier this week - an important technical threshold - for the first time since late April.

Later in the day, minutes from the Fed's October policy meeting - where the central bank cut rates by 25 basis points - are on investors' radar.

At least three Fed officials, including New York Fed President John Williams, are scheduled to speak through the day.

On Thursday, the September U.S. jobs report would be in focus after being delayed because of the long government shutdown, but it may do little more than confirm earlier private market surveys pointing to a cooling labor market.

Before the bell, DoorDash rose 3% after Jefferies upgraded its rating on the online food delivery platform to "buy" from "hold".

(Reporting by Shashwat Chauhan and Twesha Dikshit in Bengaluru; Editing by Krishna Chandra Eluri and Maju Samuel)