Wall Street's main indexes were set to open higher on Thursday, boosted by the Federal Reserve's signals of a September rate cut and a rosy sales forecast from Meta, although a pullback in chip stocks could keep gains in check.
Meta Platforms surged 8.7% in premarket trading after its second-quarter revenue beat and upbeat third-quarter sales forecast pointed to the possibility that its artificial intelligence costs would be covered.
"It's very possible that Meta's spending a little too much on AI, but they think AI is such an important trend, and for the next 15 years it's going to be the place to be," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
The Facebook-owner's quarterly results were the first among "Magnificent Seven" companies to enthuse investors, allaying concerns around AI spending after 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 Wall Street to record highs this year on AI euphoria and hopes of early rate cuts.
Most megacap stocks rose, with Apple and Amazon.com gaining 1% and 1.4%, respectively, ahead of their results after markets close. Tesla was down 0.7%.
AI trade favorite Nvidia rose 2%, a day after adding about $330 billion to its market value - a record one-day gain for any Wall Street company.
At 8:41 a.m. ET, Dow e-minis were up 54 points, or 0.13%, S&P 500 e-minis were up 27 points, or 0.49%, and Nasdaq 100 e-minis were up 94.75 points, or 0.49%.
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.
However, with growing prospects of rate cuts, 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.
Data showed weekly jobless claims rose to 249,000, higher than the 236,000 that was expected, a sign of continued labor market weakness ahead of Friday's Non-farm Payrolls reading.
Futures tracking the Russell 2000 were up 0.2% after the small-cap index logged its biggest monthly gain in July since the start of 2024, on hopes that mid- and small-cap companies will benefit from a low-interest-rate environment.
Moderna slumped 15.3% after cutting its 2024 sales forecast for COVID-19 and respiratory syncytial virus vaccines by up to 25%.
Eli Lilly rose 4.1% 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 10.5% after a conservative revenue forecast, while Qualcomm lost 1.6% on flagging a revenue hit after the U.S. revoked one of its export licenses for sanctioned Chinese telecom firm Huawei.
Most chip stocks retreated after Wednesday's rally, which saw the Philadelphia SE Semiconductor index log its best one-day gain of 7% since November 2022.
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)
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