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Futures tied to Wall Street's main indexes kicked off August on a high note, boosted by the Federal Reserve's signals of a September rate cut and a rosy sales forecast from Meta, while a pullback in some megacap and chip stocks kept gains in check.
Meta Platforms soared 6.5% in premarket trading after a second-quarter revenue beat and an upbeat third-quarter sales forecast pointed to the possibility that its artificial intelligence costs would be covered.
"Meta has bought the AI theme some time... investors are willing to overlook increased capital expenditure, as long as revenue growth remains strong," said Kathleen Brooks, research director for XTB.
The Facebook-owner's quarterly results were the first among the "Magnificent Seven" group of companies to enthuse investors, allaying concerns around AI spending following dismal earnings from Alphabet and Microsoft last month.
Markets have been on tenterhooks, looking for signs that the tech behemoths can hold on to their bumper gains after steering U.S. equities to record highs this year on AI euphoria and hopes of early rate cuts.
Most megacap stocks rose, with Apple and Amazon.com gaining 0.9% and 1.3%, respectively, ahead of their results, due after markets close. Tesla was down 0.3%.
AI-trade favorite Nvidia rose 2.2%, a day after adding about $330 billion to its market value - a record one-day gain for any Wall Street company.
The S&P 500 and the Nasdaq had their best day since Feb. 22 on Wednesday, after Fed Chair Jerome Powell offered the stock market a likely pivot to policy easing in September, with inflation on track to achieve the 2% target without undue damage to the labor market.
However, with the prospect of rate cuts gaining traction, investors are now trying to gauge if the central bank will be able to ease policy at a pace consistent with achieving the much awaited "soft landing" for the economy.
Economic data including weekly jobless claims and manufacturing PMIs, due through the day, is at the top of investors' watch list.
At 7:02 a.m. ET, Dow e-minis were up 32 points, or 0.08%, S&P 500 e-minis were up 23 points, or 0.41%, and Nasdaq 100 e-minis were up 95.25 points, or 0.49%.
Moderna tumbled 11.9% after it cut its 2024 sales forecast for COVID-19 and respiratory syncytial virus vaccines by up to 25%, or $1 billion, as it expects very low sales to the EU.
Eli Lilly was up 2.2% after
trial results
showed weight loss drug Zepbound reduces the risk of hospitalization, death and other outcomes for obese adults with a common type of heart failure.
Arm Holdings slumped 8.4% after a conservative revenue forecast, while Qualcomm lost 1.3% on flagging a revenue hit after the U.S. revoked one of its export licenses for sanctioned Chinese telecom firm Huawei.
Western Digital Corp dropped 4.3% after it forecast first-quarter revenue below estimates.
Of the 283 S&P 500 companies that have reported second-quarter earnings till date, 78.4% beat expectations, LSEG data showed.
(Reporting by Ankika Biswas and Shubham Batra in Bengaluru; Editing by Pooja Desai)