US stock futures surge on rate cut bets, strong tech earnings

Investing.com– U.S. stock index futures rose in evening deals on Wednesday after the Federal Reserve signaled that an interest rate cut was close, while a slew of strong earnings from the technology sector also boosted stocks.

Gains in futures came following a strong session on Wall Street, after the Fed’s comments and some positive earnings sparked heavy buying into technology stocks. Wall Street also rebounded from a bulk of losses logged over the past week.

S&P 500 Futures rose 0.6% to 5,588.75 points, while Nasdaq 100 Futures rose 0.9% to 19,678.50 points by 19:35 ET (23:35 GMT). Dow Jones Futures rose 0.2% to 41,141.0 points. 

Fed says rate cuts are close, flags inflation progress 

The Fed kept interest rates unchanged at the conclusion of a two-day meeting on Wednesday, as widely expected.

But Chair Jerome Powell acknowledged progress in bringing down inflation and cooling the labor market- both factors which set the stage for a potential rate cut in September. Powell explicitly mentioned the possibility of a cut in September, although he noted that it was still contingent on positive data.

The Fed will have some inflation and labor market readings to consider before its September meeting. Markets are almost entirely pricing in a 25 basis point cut in September, according to CME Fedwatch.

Focus is now on upcoming nonfarm payrolls data, due on Friday, for more cues on the labor market. The prospect of lower rates presents more liquidity for stock markets, which bodes well for valuations.

Tech rallies with Meta up front; Apple awaited 

Technology stocks surged in aftermarket trade following positive earnings from Meta Platforms Inc (NASDAQ:META). The stock rose nearly 7% after clocking stronger-than-expected second-quarter earnings and also presenting a robust outlook.

Tech was also the biggest boost to Wall Street during the session, with major chipmakers rallying on the heels of strong earnings from Advanced Micro Devices Inc (NASDAQ:AMD) and Qualcomm Incorporated (NASDAQ:QCOM). The two steadied in aftermarket trade after strong gains during the session.

The positive earnings helped investors largely look past middling results from Microsoft Corporation (NASDAQ:MSFT), which missed estimates. Chip designer Arm Holdings (NASDAQ:ARM) also clocked weak earnings, sending its stock down 11% in aftermarket trade. 

Tech earnings are set to continue with majors Apple Inc (NASDAQ:AAPL) and Amazon.com Inc (NASDAQ:AMZN) set to report on Thursday.

Strength in tech sparked strong gains in Wall Street on Wednesday. The S&P 500 surged 1.5% to 5,522.30 points, while the NASDAQ Composite rallied 2.6% to 17,598.79 points. The Dow Jones Industrial Average lagged on its limited tech exposure, rising only 0.2% to 17,598.79 points. 

But tech stocks were still nursing steep losses over the past three weeks, as they were hit by a mix of profit-taking and as expectations of interest rate cuts sparked a pivot into more economically sensitive sectors.