The main U.S. stock indexes were set to open higher on Wednesday, supported by gains in technology stocks as AI worries eased, while investors awaited minutes of the U.S. Federal Reserve’s latest policy meeting for insight on the rate outlook.
Markets were volatile on Tuesday, with the S&P 500 ending 0.1% higher after falling as much as 0.9% early in the session. The Nasdaq and the Dow saw similar reversals.
U.S. stocks have been rocked this month by worries that rapidly improving AI tools could disrupt business models, hitting sectors from software to trucking.
Broader AI-linked and megacap technology stocks also lost ground as investors demanded stronger evidence the heavy investments in the technology were tangibly boosting revenue and profits.
“We have not really seen much of a drawdown, just a lot of daily volatility, which implies that the market is more at a crossroads and waiting for some sort of a bullish or bearish catalyst to push… (it) in a new direction,” said Sam Stovall, CFRA’s chief investment strategist.
Most megacap and growth stocks rose in premarket trading on Wednesday. Nvidia was up 2.3% after the company said it had signed a multi-year deal to sell Meta Platforms millions of its current and future AI chips.
Wall Street muted as tech stocks waver after sell-off; financials outshine
Other megacaps also advanced. Amazon rose 1.4%, while Alphabet and Microsoft edged up.
Minutes from the Fed’s January policy meeting, where it held its main lending rate steady, are expected later in the day.
Traders are pricing in a chance of roughly 63% for a rate cut of at least 25 basis points at the Fed’s June meeting, the first with odds above 50%, according to CME’s FedWatch Tool.
The personal consumption expenditure report – the Fed’s preferred inflation gauge – will be in focus later in the week and is expected to provide insights into inflation and how it could impact borrowing costs.
At 08:33 a.m. ET, Dow E-minis rose 122 points, or 0.25%, S&P 500 E-minis were up 27.75 points, or 0.4%, and Nasdaq 100 E-minis gained 122.75 points, or 0.49%.
In earnings-driven moves, Analog Devices’ shares gained 5.6% after the chipmaker forecast second-quarter results above Wall Street estimates.
Global Payments gained 11% after the company projected annual adjusted profit above expectations, while data analytics firm Verisk jumped 11.7% after beating fourth-quarter profit estimates.
Moderna climbed 7.8% after the U.S. Food and Drug Administration agreed to review its influenza vaccine, reversing an earlier decision to reject the application.
Palo Alto Networks dropped 6.9% after the cyber security company trimmed its annual profit forecast, while Cadence Design Systems added 6.4% after the chip design software provider beat fourth-quarter revenue estimates.
The New York Times rose 1.8% after Berkshire Hathaway disclosed a new investment in the media company.
Hard-disk drive maker Western Digital plans to raise $3.17 billion by selling some of its stake in former unit Sandisk through a secondary share sale, sending Sandisk’s shares down 3%.
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