Dow Jones Futures: Small Caps Lead As SoundHound, Heat Stocks Surge; Nvidia At Key Level

The Dow Jones Industrial Average futures are trading higher on Thursday, with small-cap stocks leading the way. This comes as SoundHound AI (SOUN) and heat-related technology stocks surge, while Nvidia (NVDA) hovers around a key level. Let's dive into the details.

Small Caps Lead the Charge

Small-cap stocks, as represented by the Russell 2000 Index, are up 1.5% in premarket trading. This outperformance can be attributed to several factors, including the US Federal Reserve's dovish pivot and continued loosening of monetary policy, which has positively impacted small-cap stocks. As seen in Exhibit 1, the stock market performance of small caps has been correlated to the change in policy rate expectations over the last 12 months. When Fed policy rate expectations turn more dovish, small caps tend to outperform.

SoundHound AI Surges

SoundHound AI (SOUN) stock is posting big gains in Thursday's trading, up 17.9% as of 12:30 p.m. ET. The company's share price has been surging amid a day of strong momentum, with the stock up 31.33% on a single day (December 6, 2024) and by 175% over the last six months. This remarkable performance can be attributed to the growing demand for AI services and the company's strategic partnerships, such as its AI Smart Ordering service rollout at Torchy's Tacos, covering all 130 of the restaurant's locations.

Heat-Related Technology Stocks Surge

Innovative Industrial Properties (IIPR), a small-cap company focused on the acquisition, ownership, and management of industrial properties leased to state-licensed cannabis cultivators and manufacturers, has seen its stock price increase by 1.91% on a single day (December 27, 2024) and by 200% over the last year. This growth can be attributed to the increasing legalization and acceptance of cannabis, as well as the company's strategic acquisitions and partnerships in the cannabis industry. The surge in heat-related technology stocks is also driven by the growing demand for energy-efficient and sustainable solutions.

Nvidia Hovers Around Key Level

Nvidia (NVDA) stock is trading around the $200 level, a key resistance level that has been a barrier to further upside for the stock. Nvidia's stock price has been volatile in recent months, with the company facing headwinds from the slowdown in the cryptocurrency market and the impact of the US-China trade war on its supply chain. However, the company's strong fundamentals and its dominant position in the graphics processing unit (GPU) market suggest that it may be able to break through this resistance level and continue its upward trend.

Conclusion

Small-cap stocks are leading the market higher on Thursday, with SoundHound AI and heat-related technology stocks surging. Nvidia is hovering around a key level, and its ability to break through this resistance could determine the stock's direction in the near term. As the Fed's dovish pivot and the growth in AI and heat-related technologies continue to drive small-cap stock surges, investors should keep an eye on these trends and the performance of key stocks like Nvidia.