The major U.S. index futures are currently pointing to a sharply higher open on Thursday, with stocks likely to extend the upward move seen late in the previous session.

The markets are likely to benefit from a positive reaction to earnings news from Nvidia (NASDAQ:NVDA), as the chipmaker is spiking by 12.3 percent in pre-market trading.

Nvidia is rallying after reporting better than expected fourth quarter results amid strong demand for its chips to power artificial intelligence. The company also provided upbeat revenue guidance.

Shares of Nvidia have skyrocketed this year amid optimism about demand for its AI chips, and traders had been questioning whether its results would support further upside.

Ahead of the earnings news, Danni Hewson, head of financial analysis at AJ Bell said Nvidia’s results could be “make or break time for markets” and said the company needed to “smash it out of the park and show that the AI boom still has momentum.”

The futures have seen further upside following the release of a Labor Department report showing an unexpected dip in first-time claims for U.S. unemployment benefits in the week ended February 17th.

The Labor Department said initial jobless claims fell to 201,000, a decrease of 12,000 from the previous week’s revised level of 213,000.

Economists had expected jobless claims to rise to 218,000 from the 213,000 originally reported for the previous week.

With Federal Reserve officials signaling they are not in a hurry to begin cutting interest rates, signs of strength in the labor market may once again be seen as a positive for the markets.

Stocks spent most of Wednesday’s session in the red but staged a notable recovery attempt going into the close of trading. The Dow and the S&P 500 bounced well off their worst levels and into positive territory, although the tech-heavy Nasdaq still closed lower for the third straight session.

While the Nasdaq fell 49.91 points or 0.3 percent to 15,580.90, the Dow inched up 48.44 points or 0.1 percent to 38,612.24 and the S&P 500 crept up 6.29 points or 0.1 percent to 4,981.80.

Concerns about the outlook for interest rates weighed on the markets for much of the session, with the major averages falling to their worst levels after the minutes of the Federal Reserve’s latest monetary policy meeting revealed most officials remain wary of cutting interest rates “too quickly.”

The minutes of the late-January meeting said participants acknowledged risks to achieving the Fed’s employment and inflation goals were moving into better balance, but they remained highly attentive to inflation risks.

“In particular, they saw upside risks to inflation as having diminished but noted that inflation was still above the Committee’s longer-run goal,” the Fed said.

Most participants subsequently highlighted the risks of moving “too quickly” to lower interest rates and emphasized the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to the Fed’s 2 percent target.

However, the Fed said a couple of participants pointed to downside risks to the economy associated with maintaining an overly restrictive stance for too long.

The late-day recovery may have reflected expectations the Fed will still eventually cut interest rates as well as optimism ahead of the release of fourth quarter results from Nvidia.

Despite the late-day recovery by the broader markets, networking stocks continued to see substantial weakness, dragging the NYSE Arca Networking Index down by 3.0 percent to its lowest closing level in over two months.

Palto Alto Networks (NASDAQ:PANW) led the sector lower, with the cybersecurity company plummeting by 28.4 percent after reporting better than expected fiscal second quarter results but lowering its forecast for full-year revenue growth.

Computer hardware and software stocks also saw considerable weakness on the day, contributing to the lower closing by the tech-heavy Nasdaq.

Meanwhile, natural gas stocks skyrocketed along with the price of the commodity, resulting in a 2.8 percent surge by the NYSE Arca Natural Gas Index.

Oil producer, utilities and oil service stocks also moved notably higher, helping lift the markets well off their lows of the session.