Tech Giants Fuel Market Optimism

Microsoft and Meta Earnings Drive Futures Higher

Futures for major U.S. stock indices showed gains Thursday morning, buoyed by strong financial results from technology behemoths Microsoft and Meta Platforms. This positive momentum follows a mixed trading session on Wednesday.

Tech Titans Surge on Strong Earnings

S&P 500 futures climbed 0.9%, while Nasdaq 100 futures advanced 1.31%. The Dow Jones Industrial Average futures indicated a 0.29% increase. These upticks were largely attributed to the impressive quarterly earnings posted by Microsoft and Meta.

Microsoft saw its shares jump approximately 8% in extended trading after reporting that annual revenue from its Azure cloud service surpassed $75 billion. Meta experienced an even larger surge, climbing about 11%, driven by an optimistic third-quarter sales forecast that exceeded market expectations.

Trade Deal Eases Tariff Concerns

Adding to the market’s positive sentiment, President Donald Trump announced a trade agreement with South Korea on Wednesday evening, establishing tariffs at 15%. This rate is lower than the 25% previously threatened, providing some relief ahead of Friday’s significant tariff deadline.

Fed Signals No Imminent Rate Cuts

In contrast to the buoyant futures market, Wednesday’s regular trading session saw the S&P 500 close down 0.12%, and the Dow Jones Industrial Average shed 0.38%. The Nasdaq Composite managed a slight gain of 0.15%. These declines followed Federal Reserve Chair Jerome Powell‘s remarks indicating that the central bank is not yet ready to reduce interest rates.

While the Federal Reserve maintained its benchmark interest rate at 4.25% to 4.50% following its July meeting, notable dissent was registered by governors Michelle Bowman and Christopher Waller. When questioned about a potential September policy shift, Powell stated that the Fed “made no decisions.”

Investment analyst Ross Mayfield of Baird suggested that Wednesday’s market dip was understandable given the current “stretched” valuations. He noted that with much positive news already priced in, even minor hawkish comments from the Federal Open Market Committee presser could significantly influence market sentiment, which has recently returned to a bullish tone, prompting a need for consolidation.

Key Economic Data on Watch

Traders will closely monitor Thursday’s release of the personal consumption expenditures (PCE) price index for June, the Fed’s favored inflation indicator. Economists anticipate a 2.5% year-over-year increase and a 0.3% monthly rise for the headline PCE. Weekly jobless claims data will also be released.

Earnings Season Heats Up

Several prominent companies are scheduled to report their earnings before the market opens on Thursday, including Comcast, Bristol-Myers Squibb, Cigna, CVS Health, Shake Shack, AbbVie, and Mastercard. Investors will also be awaiting results from Apple and Amazon later in the afternoon.