Futures for the Nasdaq index, which is heavy on technology stocks, rose on Wednesday, supported by gains in shares of memory chip companies following the strong results of the South Korean company SK Hynix, while investors await a group of results from major companies to test the investment momentum in artificial intelligence, in addition to the US Federal Reserve’s decision on interest rates.
Shares of Micron Technology, a manufacturer of memory chips, rose by 4 percent in pre-market trading, after its South Korean competitor, SK Hynix, announced a more than seven-fold increase in its quarterly profits. SK Hynix shares, listed in the United States, also jumped by 7.8 percent, according to Reuters.
Shares of data storage companies SanDisk and Western Digital rose by 0.8 percent and 4.5 percent, respectively, while Seagate Technology bucked the trend, declining by 3.7 percent after announcing its results for the first quarter.
The gains extended to the semiconductor sector, as shares of “NVIDIA” rose by 0.8 percent, “AMD” by 1.5 percent, and “Marvel Technology” by 1.7 percent.
The shares of Alphabet, the parent company of Google, also rose by 1.2 percent, following a media report stating that Open AI intends to buy Google's artificial intelligence chips.
At 4:53 a.m. EST, the Dow Jones Industrial Average futures fell 88 points, or 0.17 percent, while the Standard & Poor's 500 futures rose by 7.25 points, or 0.1 percent, and the Nasdaq 100 futures rose by 122 points, or 0.41 percent.
The Nasdaq index had risen by about 2 percent since the beginning of the week, after sharp losses in the first half of the month, with investor sentiment improving towards artificial intelligence following the submission by Anthropic, on Monday, of an application to offer its shares for public subscription in the United States.
The results of major companies are in focus
Attention now turns to the quarterly results of Microsoft and Alphabet, which are scheduled to be announced after the markets close on Wednesday, amid expectations of accelerating business growth in the field of cloud computing.
Investors will scrutinize the two companies' capital spending plans for indications that huge investments in artificial intelligence are beginning to yield returns, in light of continuing concerns about the feasibility of financing these expenditures with debt as borrowing costs rise.
Jake Behan, head of capital markets at Direction, said: “Demand remains strong, but as capital spending continues to accelerate, the market is more focused on the actual results achieved by this spending.”
He added: “The more market doubts about the returns of artificial intelligence, the more difficult it becomes to justify current spending levels.”
Amazon and chipmaker Intel are scheduled to announce their results later in the week.
Before the markets open on Wednesday, investors are also awaiting the results of GE Vernova, which specializes in energy equipment, the pharmaceutical company Biogen, and the medical device company Boston Scientific.
The Fed's decision under the microscope
The Federal Reserve is scheduled to announce its decision on interest rates at 2 p.m. EST on Wednesday, amid widespread expectations to keep interest rates unchanged, following their cut last month.
But market expectations are still leaning towards monetary policy tightening; Data collected by the London Stock Exchange Group (LSEG) indicates that traders expect at least three increases, of 25 basis points each, by late 2027.
These expectations have risen as inflation levels continue to rise, driven by increasing energy costs in light of the ongoing conflict in the Middle East.
These expectations are expected to be tested Thursday, with the release of the September personal consumption expenditures report, the Fed's preferred measure of inflation. GDP data for the third quarter will also be released during the week, amid expectations that the economy will grow by 3.2 percent.
In other stock movements, the shares of the trading platform “Robinhood Markets” fell by 8 percent, after its profits in the third quarter fell below Wall Street expectations. Visa shares also fell by 1.7 percent after announcing its results for the fourth quarter.
US President Donald Trump announced a broad lifting of restrictions imposed on oil and gas producers to limit emissions of methane, a polluting greenhouse gas.
This announcement came during an election rally in support of Ken Paxton, who is competing strongly in Texas to win a seat in the Senate during the midterm elections on November 3.
These restrictions were put in place under former President Joe Biden.
Trump said, before a crowd in Lubbock, Texas: “Tonight, I announce the cancellation of Biden’s methane restrictions, which are costly and unnecessary, with the aim of saving consumers and energy producers $45 billion.”
Trump added, amid cheers from the audience, that this step would lead to “unleashing massive amounts of natural gas in Texas.” The state is the number one producer of fossil fuels in the country.
Trump is seeking to find ways to reduce energy costs, ahead of the midterm elections, in light of a state of public anger due to the significant rise in oil prices since the war against Iran.
Opinion polls indicate that Republicans may lose control of Congress to Democrats in the elections scheduled for next week.
Methane, the main component of natural gas, is the second largest cause of global warming after carbon dioxide, contributing about one-third of total global warming (equivalent to 0.5 degrees Celsius) since the pre-industrial era.
These changes target rules aimed at curbing methane emissions resulting from oil and gas extraction and production processes, where emissions occur at every stage; Starting from extracting gas from the ground, all the way to processing, transporting and distributing it.
According to the International Energy Agency, the United States is the world's largest emitter of methane from the oil and gas sector, followed by Russia.
