Nasdaq leads Wall St futures higher on AI optimism after Micron’s forecast

By Johann M Cherian and Purvi Agarwal

(Reuters) -U.S. stock index futures climbed on Thursday after Micron’s upbeat forecast revived the euphoria around artificial intelligence on Wall Street, while investors also awaited economic data and remarks from Federal Reserve Chair Jerome Powell.

Micron Technology jumped 14.7% in premarket trading after the memory chip maker forecast higher-than-expected first-quarter revenue, underscoring that demand for memory chips used in AI computing was robust.

The optimism lifted other chip stocks, with Nvidia rising 1.8%, Advanced Micro Devices advancing 2.2% and Broadcom adding 1.7%.

Semiconductor equipment companies such as Applied Materials and KLA Corp also jumped 5.4% and 4.5% respectively.

“Optimism surrounding AI had taken a bit of a backseat in recent weeks. The strong revenue guidance from Micron has revived the AI trade a little bit, reminding the market that AI is still relevant,” said Fiona Cincotta, senior market analyst at City Index.

Meta led gains among other growth names with a 1.9% rise, a day after unveiling an entry-level version of its Quest line of mixed-reality headsets. Alphabet added 1.3%, Tesla climbed 1.4% and Microsoft was up 0.8%.

At 7:02 a.m. ET, Dow E-minis were up 209 points, or 0.49%, S&P 500 E-minis were up 45.75 points, or 0.79% and Nasdaq 100 E-minis were up 287.75 points, or 1.43%.

Futures tracking the Russell 2000 small caps index added 1%.

The benchmark S&P 500 and blue-chip Dow have hit multiple record highs since the start of this year and the tech-laden Nasdaq is about 3% away from its own milestone as investors lap up shares of companies that could see a boost to earnings from AI-integration.

Expectations of lower interest rates this year have further strengthened the rally. Focus will now be on jobless claims data for the week ended Sept. 21 and a final second-quarter gross domestic product (GDP) estimate. The reports are due at 8:30 a.m. ET.

Late on Wednesday, Fed Governor Adriana Kugler said she “strongly supported” the central bank’s decision to kick off monetary policy easing with a rare half a percentage point cut last week, as part of an emerging focus on the job market.

The spotlight will now be on Powell’s remarks at a New York conference expected before the market opens for clues on the health of the economy and the outlook for interest rate cuts.

Traders expect the Fed to deliver another outsized cut in November with a 60.8% chance, up from 38.8% a week ago, as per the CME Group’s FedWatch Tool.

A host of Fed officials, including John Williams, Michael Barr, Michelle Bowman and Neel Kashkari are also scheduled to speak later in the day.

Among others, copper miners such as Freeport-McMoRan rose 4.9%, while lithium miners such as Albemarle climbed 4.3% and Arcadium added 2.7% after a report said China plans to issue special sovereign bonds worth about 2 trillion yuan as part of a fresh fiscal stimulus.

The optimism also spread to U.S.-listed Chinese firms such as Li Auto that advanced 8%, PDD Holdings rose 8.2% and Alibaba added 6%.

Accenture gained 6.8% after the IT services provider forecast annual revenue above estimates.

(Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Anil D’Silva and Maju Samuel)