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Futures up: Dow 0.42%, S&P 500 0.97%, Nasdaq 1.52%

July 31 (Reuters) - Nasdaq futures jumped more than 1%

on Wednesday after a bullish forecast from Advanced Micro

Devices ( AMD ) bolstered struggling chip stocks, while Microsoft ( MSFT ) bucked

the positive trend in megacaps ahead of a key U.S. interest-rate

decision.

AMD soared 9.2% in premarket trading after it

increased its 2024 forecast for artificial-intelligence-chip

sales.

Chip stocks such as AI favorite Nvidia ( NVDA ), Intel ( INTC )

, Marvell Technology ( MRVL ), Qualcomm ( QCOM ),

Broadcom ( AVGO ) and Arm Holdings jumped between 2% and

5.2%.

At 5:39 a.m. ET, Dow e-minis were up 171 points, or

0.42%, S&P 500 e-minis were up 53.25 points, or 0.97%,

and Nasdaq 100 e-minis were up 287.5 points, or 1.52%.

Megacap tech and chip stocks have taken a hit this month,

after steering the U.S. equity market to record highs in 2024,

on euphoria around AI adoption and the prospect of early rate

cuts from the U.S. Federal Reserve. Investors, who now see value

in underperforming sectors, have started rotating away from

megacaps.

The Philadelphia SE Semiconductor index is set to log

its first monthly decline in three and its worst month since

September 2022. The Nasdaq and the S&P 500 - market-cap weighted

indexes which are heavily inclined towards expensive tech stocks

- are also set for their weakest month in three, while the

price-weighted Dow is on track for its best monthly performance

since last December.

Microsoft ( MSFT ) lost 2.6% as it plans to spend more this

fiscal year to build its AI infrastructure, even as growth in

its cloud business slowed - another sign that the payoff from

hefty investments in the technology might take longer than

hoped.

In other megacaps, Alphabet, Apple ( AAPL ),

Amazon.com ( AMZN ), Meta Platforms ( META ) and Tesla

were up between 0.2% and 1.3% on the day.

Meta will report earnings after markets close, while results

for Apple ( AAPL ) and Amazon ( AMZN ) are due on Thursday.

Quarterly results from tech giants Tesla, Microsoft ( MSFT ) and

Alphabet so far have failed to live up to Wall Street's

expectations as investors look for signs to justify the

over-stretched valuations for the elite group of stocks, and if

the AI-led equity run has steam to spare.

Focus turns to a highly anticipated monetary policy decision

from the Federal Reserve later in the day, where it is expected

to hold rates steady and open the door for a September rate cut.

With traders fully pricing in a cut by September, according

to CME's FedWatch, they fear that any disappointment on this

front could amplify the recent equity selloff.

The S&P 500 and Nasdaq fell on Tuesday, weighed by chip and

megacap shares, while the Dow outperformed in a fading sector

rotation.

The ADP National Employment reading for July, due at 8:15

a.m. ET, will also be on investors' watch list after U.S. job

openings data on Tuesday pointed to continued labor resilience

underpinning the economy.

In earnings, Starbucks ( SBUX ) rose 2.3% after its store

operation improvements helped the coffee chain meet quarterly

profit expectations.

Pinterest ( PINS ) slumped 12.5% after forecasting

current-quarter revenue below expectations, while Match Group ( MTCH )

jumped 10% after a second-quarter revenue beat and

plans to lay off about 6% of its staff.