Investing.com--U.S. stock futures rose Wednesday amid optimism the Federal Reserve will pave the way for a September rate cut, overshadowing disappointing earnings from Microsoft.
At 09:35 ET (13:35 GMT), Dow Jones Futures rose 25 points, or 0.1%, S&P 500 Futures gained 65 points, or 1.2%, and Nasdaq 100 Futures climbed 330 points, or 1.9%.
Optimism over Fed
All eyes are on the Federal Reserve Wednesday, as the U.S. central bank concludes its latest policy-setting meeting.
The Fed is widely expected to maintain its benchmark overnight interest rate in the current 5.25%-5.50% range, as it has done since last July, but investors are looking for policymakers to lay the groundwork for a September rate cut.
Futures are fully priced for a quarter-point easing in September, with a small chance of a reduction of 50 basis points, and have 66 basis points of easing priced in by Christmas.
The S&P 500 and NASDAQ Composite are on course to end the month lower, with the latter seen losing over 3%.
The Dow Jones Industrial Average, on the other hand, is on track to finish the month higher by more than 4%, as the market rotated out of the major tech stocks into companies that are smaller and more cyclically oriented.
Microsoft cloud revenue misses estimates
Aside from the Fed, investors will be digesting quarterly earnings results from a number of influential companies.
Microsoft (NASDAQ:MSFT) stock fell around 1% after its fourth-quarter cloud revenue growth missed expectations.
While the firm’s overall earnings just edged past estimates for the June quarter, revenue from Azure, the company’s cloud business, grew 29%, missing estimates of 30.2% and also slowing from the 31% rise in the prior quarter. This came even as investment in AI saw capital expenditure surge by $5 billion in the quarter.
On the flip side, Advanced Micro Devices (NASDAQ:AMD) stock surged almost 8%, while rival NVIDIA (NASDAQ:NVDA) added over 7% after AMD clocked stronger-than-expected earnings and forecast upbeat revenue for the current quarter, citing strong demand from AI.
AMD’s earnings highlighted a potential division in AI-fueled earnings - where the suppliers of AI-related equipment appeared to be faring better than their customers.
Meta Platforms next up
Meta Platforms (NASDAQ:META) becomes the latest of the mega-cap tech giants to release quarterly results this week, after the close.
Meta, which owns and operates Facebook, Instagram, Threads, and WhatsApp, among other products and services, is expected to report a 20% rise in quarterly revenue.
Elsewhere, Starbucks (NASDAQ:SBUX) stock rose 5.5% after the coffee chain met expectations for quarterly profit, even as its global sales declined on persistent weakness in consumer spending in its top markets of the U.S. and China.
T-Mobile US (NASDAQ:TMUS) stock rose 2.7% after the telecoms giant after the telecoms company raised its full-year forecast for monthly bill-paying phone subscriber additions as more customers opted for its discounted unlimited plans that include streaming perks.
Pinterest (NYSE:PINS) stock fell 6.4% after the social media service offered a softer-than-expected outlook for its third quarter, despite achieving a record 522 million global monthly active users, marking a 12% increase from the previous year.
Match Group (NASDAQ:MTCH) stock soared 8.6% after the online dating service recorded a second-quarter revenue beat and announced plans to lay off about 6% of its staff to cut costs.
Crude soars on Middle East tensions
Crude prices soared Wednesday after the killing of Hamas leader Ismail Haniyeh in Iran ratcheted up tensions in the Middle East, raising the prospects of a wider conflict hitting supplies.
By 09:35 ET, the U.S. crude futures (WTI) climbed 3.1% to $77.06 a barrel, while the Brent contract rose 2.9% to $80.31 a barrel.
Multiple media reports said that Ismail Haniyeh was killed in an Israeli strike, and could mean a potential escalation in the Israel-Hamas war, which stretched into a ninth month in July.
It could also result in a resurgence in tensions between Iran and Israel, after a series of missile strikes between the two earlier this year, and furthered fears of an all-out war in the Middle East, especially after Israel carried out strikes against Lebanon-based, Iran-backed armed group Hezbollah on Tuesday.
This news has overshadowed data from the American Petroleum Institute showing on Tuesday that U.S. inventories saw a draw of nearly 4.5 million barrels last week.
The reading, if backed by official data due later in the session, would mark a fifth straight week of draws in U.S. inventories, as fuel demand remained underpinned by the travel-heavy summer season.
(Ambar Warrick contributed to this article.)