S&P 500 and Nasdaq futures inched higher on Wednesday while investors waited for the Federal Reserve's policy verdict, due at 2:00 p.m. ET. Chip stocks seesawed after SK Hynix's quarterly results fell short of investor expectations, and traders are pricing in only a 35.1% likelihood of a rate hike. Results from Microsoft, Meta, Amazon.com and Apple land later this week.
S&P 500 and Nasdaq futures inched higher on Wednesday as investors awaited the Federal Reserve's monetary policy verdict against a backdrop of simmering Middle East tensions, while chip stocks struggled ahead of Big Tech earnings later this week.
At 05:42 a.m. ET, S&P 500 E-minis were up 17.5 points, or 0.23%, and Nasdaq 100 E-minis were up 76.75 points, or 0.27%. Dow E-minis, by contrast, were down 89 points, or 0.17%.
Chip stocks seesaw after SK Hynix misses expectations
Global markets have been volatile this month as investors questioned the sustainability of the AI spending boom after signs that major U.S. companies were deepening a web of AI-linked investments and continuing to funnel billions into the technology even at the expense of free cash flow.
That scrutiny comes as competition from China heats up, both in the race to develop advanced chips and as Chinese firms roll out cheaper AI models. On Wednesday the rout extended from Asia through Europe after South Korean chipmaker SK Hynix's bumper quarterly results fell short of lofty investor expectations.
U.S.-listed shares of the chipmaker dipped 0.5% in premarket trading, while Nvidia edged up 0.3%, Micron climbed 0.5%, Applied Materials dropped 1.1% and SanDisk edged up 0.5%. Offering some respite, Seagate Technology rose 6% after forecasting quarterly results above estimates.
Tech concerns have pushed the Nasdaq to a three-month low, prompting investors to focus on other areas of the market such as consumer staples and healthcare. The blue-chip Dow is also at a two-week high.
Traders price a 35.1% chance of a hike
Traders are pricing in only a 35.1% likelihood that the Fed will hike interest rates, LSEG-compiled data showed, on the back of a report that showed price pressures moderated in the previous month. However, they see interest rates rising by at least 25 basis points by year-end as tariff costs and energy prices feed into inflation.
Crypto Briefing reports the consensus expectation is that the Fed will hold the federal funds rate at 3.5% to 3.75%, the level set after the previous meeting in mid-June. Meanwhile, crude prices soared 3.3% to $86.8 a barrel as tensions in the Middle East flared up.
Markets will scrutinize Chairman Kevin Warsh's comments following the decision to gauge his tone on monetary policy at a time when he has said the central bank will avoid offering any guidance on interest rates.
Big Tech results close out the week
Results from Microsoft, Meta, Amazon.com and Apple later this week will be closely watched for signs that their billion dollar AI investments were boosting earnings, and shares of the companies were marginally higher in premarket trading. Microsoft reports after the close on July 29, with Wall Street expecting earnings per share of $4.21.
So far the second-quarter season has reflected healthy corporate performance, with 85.2% of the 169 S&P 500 companies that have reported earnings having surpassed expectations, LSEG compiled data showed. Historically, 68% of companies have achieved that feat.
Sources: Investing.com, Crypto Briefing
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