Microsoft's stronger-than-expected earnings forecast steadied U.S. stock futures on Thursday, a day after a Fed-driven selloff hit Wall Street. Meta Platforms still fell after a 91% drop in free cash flow, a sign that worries over AI spending have not gone away even as investors await GDP data and more earnings from Apple and Amazon.
U.S. stock index futures steadied on Thursday as Microsoft's forecast-beating results offset concern over the Federal Reserve's policy outlook, a day after a selloff tied to that same uncertainty dragged major indexes lower.
Microsoft rose nearly 9% in premarket trading after forecasting current-quarter sales and cloud growth above expectations. The company also gave a capital-expenditure outlook below Wall Street estimates and said it expects to keep generating cash through its just-started fiscal 2027.
AI spending fears still weigh on megacap tech
In a sign that AI concerns were far from over, Meta Platforms dropped 9.2% after its second-quarter report. Free cash flow at the social media giant fell 91% in the second quarter, underscoring the financial strain of its costly AI buildout.
Negative cash-flow reports from Alphabet and Tesla last week sparked a bout of selling in AI-linked stocks, with chip stocks also under pressure as investors questioned high valuations. The tech-heavy Nasdaq dropped 10% from its early June peak on Wednesday.
Fed uncertainty deepened the rout
The selloff traces back to Wednesday, when the S&P 500 posted its biggest percentage drop since June 10 after the Federal Reserve left interest rates unchanged in the 3.50%-3.75% range. Mixed messages from new Fed Chair Kevin Warsh left traders confused about the path of borrowing costs.
U.S. 30-year Treasury yields jumped to 19-year highs on Thursday, while the yield on 2-year notes, which reflects near-term rate expectations, held largely unchanged at 4.26%. Traders currently see a 65% chance the Fed will raise rates by 25 basis points at its September meeting, per CME Group's FedWatch tool.
GDP data and more earnings loom
Key data due later Thursday include the preliminary second-quarter GDP reading, June personal consumption expenditures, and weekly jobless claims. The report is expected to show the economy grew at a 2.1% annualized rate last quarter, matching the January-March quarter's pace, as the economy largely weathered the Middle East conflict.
At 6:18 a.m. ET, S&P 500 E-minis were up 0.41%, Nasdaq 100 E-minis gained 0.86%, and Dow E-minis added 0.23%. Apple and Amazon are due to report earnings after markets close on Thursday.
Source: Investing.com
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