Highlights of Market Movements and Earnings
Stay tuned for updates throughout the trading day
U.S. equity futures experienced a solid upswing on Wednesday, driven by significant gains in the semiconductor sector and a decrease in Treasury bond yields, as investors prepared for an important Federal Reserve rate decision amidst a whirlwind of headline risks affecting global financial markets.
Robust second quarter earnings from chip manufacturers Advanced Micro Devices and Samsung, partly fueled by soaring AI investment demand, are propelling the semiconductor sector ahead of today’s market session and mitigating the effects of mixed fourth quarter results from Microsoft.
Microsoft, the second-largest company globally, surpassed analyst expectations for sales and profits but indicated that its capital spending would continue to increase. Additionally, it reported a slight deceleration in revenue growth from its Azure cloud segment, implying that hyperscalers might require more time to capitalize on their AI investments.
However, the broader market attention during this session is likely to concentrate on the Fed’s rate announcement, scheduled for 2:00 pm Eastern time, along with Chairman Jerome Powell’s regular press conference set for half an hour later.
No adjustments are anticipated in the Fed Funds rate, which currently sits at a two-decade peak of between 5.25% and 5.5%, but Powell is broadly expected to hint at at least one rate cut, potentially more, starting in early autumn.
Benchmark 10-year Treasury bond yields, which have declined roughly 15 basis points since the Fed’s last meeting in June, were last observed trading at 4.134%, while 2-year notes were noted at 4.367%.
As the trading day on Wall Street approaches, futures linked to the S&P 500, which remains in the red for the month, are indicating a 53-point gain to commence the session, alongside a 120-point increase for the Dow Jones Industrial Average.
The tech-centric Nasdaq is projected to rise by 280 points, partially due to a 9% increase for AMD and a 5.6% boost for Nvidia.
Microsoft’s shares were trading at 2.05 each, down 2.6%, while Meta Platforms, which is set to announce its results post-market close, edged up 0.22% to 4.21 each.
Additional Insights from Wall Street Analysts:
- An analyst reassesses Nvidia stock price target following Blackwell evaluations
- Analysts offer new Walgreens stock price targets after earnings report
- An analyst updates Facebook parent stock price target in the AI competition
Global Economic and Geopolitical Updates
In Asia overnight, the Bank of Japan raised its benchmark lending rate for only the second occasion in 17 years, while announcing plans to reduce its monthly bond purchases, slowly moving towards normalizing policy after a prolonged battle against deflation.
The Bank of England will also reveal its rate decision in London, but traders are not anticipating any changes to the benchmark Bank Rate following a succession of stronger-than-expected GDP growth indicators.
Meanwhile, global oil prices surged in overnight trading in response to the assassination of senior Hamas leader Ismail Haniyeh, who was killed during a visit to Iran.
Iran has attributed the assassination to Israel, which has yet to provide an official response, while Supreme Leader Ayatollah Ali Khamenei has promised “harsh punishment” in retaliation.
Brent crude futures for September delivery, the global pricing standard, were last seen up .72 for the session at .36 per barrel, while WTI contracts for the same month, connected to U.S. gas prices, increased .94 to .67 per barrel.
In international markets, Europe’s Stoxx 600 advanced by 0.95% in Frankfurt, while the FTSE 100 rose by 1.41% in London.
In Asia overnight, the Nikkei 225 finished 1.49% higher following the Bank of Japan’s rate hike, and the regional MSCI ex-Japan benchmark gained 1.2% as trading concluded.
Related: Veteran fund manager foresees a challenging period ahead for stocks
