Chip stocks bolster Nasdaq, S&P 500 before Fed verdict
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US private payrolls miss expectations in July - ADP
Fed expected to hold rates steady at 2 p.m. ET
Mastercard gains after Q2 profit beat
Boeing shares rise after it names new CEO
Futures up: Dow 0.21%, S&P 500 1.16%, Nasdaq 1.98%
Updated at 8:40 a.m. ET/1240 GMT
By Ankika Biswas and Johann M Cherian
July 31 (Reuters) - The Nasdaq and the S&P 500 were poised to open sharply higher on Wednesday after a bullish forecast from AMD boosted struggling chip stocks, while Microsoft faltered among megacaps ahead of an interest-rate decision from the Federal Reserve.
Advanced Micro Devices AMD.O soared 7.5% in premarket trading after it lifted its2024 forecast for AI-chipsales, raising other chip stocks.Nvidia NVDA.O jumped 7.2%, Intel was up 2.2%INTC.O andBroadcom AVGO.O rose 6.2%.
Microsoft MSFT.O lost 1.6% as it plans to spend more this fiscal year to build its AI infrastructure, even as growth in its cloud business slowed - another sign that the payoff from hefty investments in the technology could takelonger than hoped.
Alphabet GOOGL.O gained 1.6%, Meta Platforms META.O rose 0.9% andTesla TSLA.O was up 0.8%.
"AMD's results pleased investors more than Microsoft's disappointed, and as a result people are adding to positions in the semiconductor space," said Sam Stovall, chief investment strategist at CFRA Research.
At 8:40 a.m. ET, Dow e-minis 1YMcv1 were up 87 points, or 0.21%, while S&P 500 e-minis EScv1 were up 63.75 points, or 1.16%, and Nasdaq100 e-minis NQcv1 were up 375.75 points, or 1.98%.
Tech and chip stocks have taken a hit this month after prompting a record-breaking Wall Street run this year, on euphoria surrounding AIadoption and the prospectof early rate cuts from the U.S. Federal Reserve. Investors, who now see value in underperforming sectors, have started rotating away from megacaps.
The Philadelphia SE Semiconductor index .SOX is set to log its first monthly decline in three and its worst month since September 2022.
The Nasdaq and the S&P 500 - market-cap weighted indexes which are heavily inclined towards expensive tech stocks - are also set for their weakest month in three, while the price-weighted Dow is on track for its best monthly performance since last December.
Meta will report earnings after markets close, while results for Apple and Amazon are due on Thursday.
Quarterly earnings from tech giants Tesla, Microsoft and Alphabet have so far disappointed investors, who are questioning if the AI-driven rally has run out of steam.
Investors are now focusing on the major event of the week - the Fed'sdecision and commentary on interest rates. The central bankis expected to hold rates steady and open the door for a September rate cut.
With traders fully pricing in a cut by September, according to CME's FedWatch, the fear is thatany disappointment on this front could amplify the recent equity selloff.
Fresh employment data showed a lower-than-expected rise in U.S. private payrolls in July, but that is in all likelihood not a true reflection of the labor market, which continues to moderate gradually.
Among others, T-Mobile TMUS.O jumped 2.8% afterraising its full-year forecast for monthly bill-paying phone subscriber additions.
Mastercard MA.N gained 3% after the payments giant'ssecond-quarter profit rose 17%.
Pinterest PINS.N slumped 8.4% after forecasting current-quarter revenue below expectations, while Match Group MTCH.O jumped 11% after a second-quarter revenue beat and a plan to lay off about 6% of its staff.
Boeing BA.N climbed 2% after naming aerospace industry veteranKelly Ortberg its new president and CEO.
Reporting by Ankika Biswas and Johann M Cherian in Bengaluru; Editing by Pooja Desai and Saumyadeb Chakrabarty
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