5 Things to Know Before Markets Open

Nvidia shares surged after the AI chipmaker posted a blowout revenue forecast and Fitch put the U.S. credit rating on watch as debt ceiling negotiations drag on. Here’s what investors need to know today.

1. Nvidia Shares Surge, Lift Other AI Stocks After Optimistic Forecast

A surprisingly strong earnings report from Nvidia is pushing stocks linked to artificial intelligence higher. Shares of Nvidia (NVDA) traded 25% percent higher in the pre-market after it reported profits,revenue and an outlook that exceeded analyst expectations, as the chip company forecast $11 billion in revenue for the current quarter. Nvidia’s surge places it close to a $1 trillion valuation as other AI-related stocks also moved higher, including Advanced Micro Devices (AMD) and TSMC (TSM).

2. Fitch Puts US Credit Rating on Watch After Debt Ceiling Delays

Fitch, one of the three big ratings agencies, put the U.S.’s AAA long-term foreign-currency issuer default rating on negative watch after the escalating drama over the debt-ceiling negotiations in Washington. Fitch said that the political partisanship and brinkmanship over the debt-ceiling debate prompted the “Rating Watch Negative” as lawmakers continue negotiations ahead of the projected June 1 deadline.

3. Initial Jobless Claims Expected to Tick Up

Investors will get another look at economic conditions when initial jobless claims are released at 8:30 a.m. ET. Claims are expected to increase to 245,000, up from 242,000 from last week. Also coming today, the second reading of Gross Domestic Product (GDP) is expected to confirm that the economy grew 1.1% in the first quarter. At 10 a.m. ET, pending home sales will be released and are expected to have climbed 0.8% in April after a 5.2% drop in March.

4. Snowflake Shares Fall on Weak Guidance

Shares of cloud data platform provider Snowflake (SNOW) were 14% lower in pre-market trading after it issued weak guidance in its quarterly earnings report, despite increasing revenue 48% year-over-year and announcing it would acquire search startup Neeva. But the company also forecast a second quarter revenue of up to $625 million, lower than the $649 million that analysts anticipated.

5. American Eagle Outfitters Shares Fall After Lowering Retail Outlook

American Eagle Outfitters (AEO) shares fell almost 20% after the mall retailer lowered its operating income forecast for the fiscal year, while also projecting its full-year revenue would be flat or down single digits. The company had previously forecasted full-year revenue would flat or up single digits, as the company joined Target and other retailers who have recently pulled back on retail sales projections.