July 29 (Reuters) – 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.
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.
The 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 company dipped 0.5% in premarket trading, while other chip stocks seesawed in volatile trade. Nvidia edged up 0.3%, Micron climbed 0.5%, Applied Materials dropped 1.1% and SanDisk edged up 0.5%.
Offering some respite was memory chip maker Seagate Technology, which rose 6% after forecasting quarterly results above estimates. Fuel cell systems provider Bloom Energy jumped 11% after raising annual forecasts.
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. Shares of the companies were marginally higher in premarket trading.
At 05:42 a.m. ET, Dow E-minis were down 89 points, or 0.17%, and S&P 500 E-minis were up 17.5 points, or 0.23%. Nasdaq 100 E-minis were up 76.75 points, or 0.27%.
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.
FED DAY
The spotlight later in the day will be on the Fed’s monetary policy verdict, due at 2:00 p.m. ET, against the backdrop of crude prices soaring by 3.3% to $86.8 a barrel as tensions in the Middle East flared up.
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.
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 that the central bank will avoid offering any guidance on interest rates.
Ford Motor gained 4.7% after raising its annual profit outlook for a second time this year.
The second-quarter earnings 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% companies have achieved that feat.
(Reporting by Johann M Cherian in Bengaluru; Editing by Devika Syamnath)
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