By Shashwat Chauhan and Twesha Dikshit
Feb 18 (Reuters) – U.S. stock index futures gained on Wednesday as tech stocks advanced reflecting easing AI worries, while investors awaited minutes from the Federal Reserve’s most recent policy meeting for clues on the interest rate outlook.
Markets have been volatile, with the S&P 500 ending 0.1% higher on Tuesday after falling as much as 0.9% early in the session. The Nasdaq and the Dow also saw similar reversals.
Wall Street’s main indexes have been rocked this month by worries of disruption from rapidly improving AI tools that hit sectors from software to trucking.
Broader AI-linked and megacap technology stocks also lost ground as investors looked for stronger evidence that the heavy investments in the technology were tangibly boosting revenue and profits.
“In extremis, AI disruption risks could undermine the customer base that underwrote hyperscalers’ capex thesis,” Geoff Yu, BNY’s EMEA macro strategist, wrote in a note.
“With sentiment and positioning indicators starting the year near highs, there is a risk that the pullback continues. However, we emphasize that additional drag will have to come from other forms of tightening in financial markets.”
On Wednesday, most megacap and growth stocks rose in premarket trading. 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.
Other megacaps also advanced. Amazon.com rose 1.6%, while Meta and Microsoft were marginally higher.
The release of minutes from the Fed’s January policy meeting, where it held its main lending rate steady, is 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.
Later in the week, the personal consumption expenditure report – the Fed’s preferred inflation gauge – will be in focus and is expected to provide insights into inflation and how it could impact borrowing costs.
At 07:11 a.m. ET, Dow E-minis were up 167 points, or 0.34%, S&P 500 E-minis were up 35.5 points, or 0.52%, and Nasdaq 100 E-minis were up 179 points, or 0.72%.
In earnings-driven moves, Analog Devices’ shares gained 7% after the chipmaker forecast second-quarter earnings above Wall Street estimates.
Global Payments projected annual adjusted profit above expectations, sending its shares up 6%.
Palo Alto Networks dropped 6.2% after the cybersecurity company trimmed its annual profit forecast, signaling rising costs from recent acquisitions to enhance its artificial intelligence capabilities.
Cadence Design Systems climbed 7.7% after the chip design software provider beat fourth-quarter revenue estimates.
New York Times rose 3.6% 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%.
(Reporting by Shashwat Chauhan and Twesha Dikshit in Bengaluru; Editing by Pooja Desai and Saumyadeb Chakrabarty)
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