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U.S. equity futures moved higher in early Thursday trading, helped by solid gains for some megacap tech stocks and a pullback in Treasury bond yields, as investors continue to navigate the fourth quarter earnings season while focused on the impact of DeepSeek’s emergence on the broader AI investment story.
Stocks ended lower across the board on Wednesday, with the S&P 500 falling 0.47%, following a relatively hawkish interest rate decision from the Federal Reserve and another outsized decline for AI chipmaker Nvidia (NVDA) .
The Fed, as expected, held its benchmark lending rate steady at between 4.25% and 4.5%, but removed language about making progress on inflation from its formal statement, a move that market interpreted as indicative of a “higher for longer’ policy stance heading into the first half of the year.
“With policy being well calibrated, the Fed is in ‘no hurry’ to make further fed funds rate adjustments,” said EY chief economist Gregory Daco. “This indicates a relatively high bar for rate cuts, even if it would be misguided to assume policy recalibration is over.”
“We expect the Federal Reserve will adopt an extremely reactive approach going forward, with policymakers heavily reliant on inflation and employment data to inform their decisions, potentially over-extrapolating short-term trends,” he added.
Fed Chairman Jerome Powell indicated that the central bank is in “no hurry” to lower interest rates as inflation continues to remain elevated in the world’s biggest economy
Anna Moneymaker/Getty Images
Focus in Thursday’s session, however, is likely to shift to the performance of three key stocks, Microsoft (MSFT) , Meta Platform (META) and Tesla (TSLA) , as well as the December quarter update from Apple (AAPL) expected after the close of trading.
“The latest earnings reports from Microsoft, Tesla, and Meta highlight a tech sector in flux – balancing AI-driven growth, competitive pressures, and shifting investor sentiment,” said Jacob Falkencrone, chief investment strategist for Europe at Saxo Bank.
“While AI remains the unifying theme across all three companies, each is facing distinct challenges,” he added. “Microsoft is struggling to scale its cloud business, Tesla is grappling with slowing vehicle demand, and Meta is pouring billions into AI despite regulatory and cost concerns.”
Microsoft shares slipped 4% in premarket trading after the tech giant topped Street forecasts for its second quarter earnings, but posted disappointing growth for its Azure cloud division, the focus of its AI push, and indicated a similar performance over the three months ending in March.
On the flip side, Tesla shares rose 1.9% despite missing Street forecasts for profits and sales in its fourth quarter update, but forecasting a return to growth for its legacy automaking business and the launch of a low-cost model in the first half of the year.
Related: Meta earnings includes surprising 2025 outlook
Facebook parent Meta, which declined to provide a full-year revenue outlook, was otherwise bullish on the impact AI will have on its social media business, sending shares 2% higher in premarket trading.
Collectively, the moves are helping stocks into a solid opening bell ahead of the Commerce Department’s first look at fourth quarter GDP and the Labor Department’s weekly update on jobless claims at 8:30 am Eastern time.
Futures contracts tied to the S&P 500 suggest a 22 point opening bell advance, with the Nasdaq called 102 points higher. The Dow, meanwhile, is priced for a 192 point gain.
Other stocks on the move include American Airlines (AAL) , which fell 2.7% following last night’s tragic crash between a regional passenger jet and a U.S. Army Black Hawk helicopter near Reagan Washington National Airport.
Related: Fed decision cements interest rate case
In overseas markets, Europe’s Stoxx 600 hit a fresh all-time peak, and was last marked 0.45% higher in Frankfurt, ahead of a European Central Bank rate decision later in the session.
The ECB is expected to lower its benchmark deposit rate by 25 basis points, to 2.75%, following data showing contraction in the major Eurozone economies of Germany and France and a broader stagnation for the 20 nations that share the single currency.
Overnight in Asia, Lunar New Year holidays continue to keep most markets dark, with the regional MSCI ex-Japan benchmark edging 0.01% lower in thin trading. Japan’s Nikkei 225, meanwhile, rose 0.25% in Tokyo.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
