(For a Reuters live blog on U.S., UK and European stock
markets, click or type LIVE/ in a news window.)
* Futures up: Dow 0.23%, S&P 500 0.41%, Nasdaq 0.86%
* Microsoft ( MSFT ) jumps after forecasting upbeat sales, cloud
growth
* Meta drops 9.2% after second-quarter free cash flow
plunges 91%
* Traders see 65% chance of 25-bps Fed rate hike in
September
July 30 (Reuters) - U.S. stock index futures steadied on
Thursday after a sharp selloff driven by uncertainty around the
Federal Reserve's policy outlook, while Microsoft's ( MSFT )
forecast-beating results soothed investor concerns about massive
AI spending by companies.
Microsoft ( MSFT ) rose nearly 9% in premarket trading after
the company forecast current-quarter sales and cloud growth that
beat expectations, gave a capital expenditure outlook below Wall
Street estimates and said it expects to keep generating cash
through its just-started fiscal 2027.
Investors have been spooked by rising AI costs at big
technology firms even as they report strong earnings. Negative
cash-flow reports from Alphabet and Tesla
last week sparked a bout of selling in AI-linked stocks, with
chip stocks also coming under pressure as investors question
high valuations. The tech-heavy Nasdaq dropped 10% from
its early June peak on Wednesday.
In a sign that AI concerns were far from over, Meta
Platforms ( META ) dropped 9.2% after the social media giant
reported a 91% drop in second-quarter free cash flow,
underscoring the financial strain of its costly AI buildout.
Apple ( AAPL ) and Amazon ( AMZN ) are scheduled to report
earnings after markets close on Thursday.
U.S. stocks fell sharply on Wednesday, with the benchmark
S&P 500 posting its biggest percentage drop since June
10, after the Fed left interest rates unchanged in the
3.50%-3.75% range, but 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 interest rate expectations, was largely
unchanged at 4.26%.
Traders currently see a 65% chance that the U.S. central
bank will raise interest rates by 25 basis points at its
September meeting, as per CME Group's FedWatch tool.
Key economic data including the preliminary reading of
second-quarter GDP, personal consumption expenditures for June
and weekly initial jobless claims are due at 8:30 a.m. ET.
The GDP report is expected to show the U.S. 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 30.5 points, or 0.41%, Nasdaq 100 E-minis
were up 236.25 points, or 0.86%, and Dow E-minis
were up 119 points, or 0.23%.
Among other stocks, Qualcomm ( QCOM ) fell 5.3%, as the
chipmaker forecast fourth-quarter profit below estimates and
said revenue from Apple ( AAPL ) products would decline faster than
expected.
U.S.-listed shares of Arm dropped 5% after the
British chip designer said it expects smartphone royalties to
fall in "this next quarter".
Nearly half of S&P 500 companies have reported
second-quarter results so far. Of those, 85.2% have topped
analysts' profit estimates, as per LSEG IBES data, compared with
an average beat rate of 68%.
Starbucks ( SBUX ) climbed 7.3% after the world's largest
coffee chain raised its annual sales and profit forecasts, while
Chipotle Mexican Grill ( CMG ) added 5% as the burrito chain
raised its annual sales forecast.