US stock futures stabilize after AI rally; Fed interest rate decision, CPI adjustment By Investing.com
Investing.com– U.S. stock index futures were steady in Tuesday evening trading after an artificial intelligence-fueled rally lifted Wall Street to record highs as the market focused on the Federal Reserve and upcoming inflation data.
Hype around AI has remained a key point of market support since Apple Inc (NASDAQ:) announced a partnership with ChatGPT maker OpenAI to roll out AI features. This optimism comes after Oracle Corporation (NYSE:) announced partnerships with Microsoft Corporation (NASDAQ:), OpenAI and Alphabet Inc’s Class A (NASDAQ:) Google for more cloud capacity to support AI. It also spread.
Nonetheless, a wider rise was curbed by expectations of further clues on US interest rates later on Wednesday.
It closed at 5,386.50 points, up 0.1%, and at 19,265.75 points, up 0.1%. By 19:14 ET (23:14 GMT) it had stabilized at 38,788.0 points.
Fed meets CPI data due on Wednesday
The market’s focus was on Wednesday’s conclusion of the two-day Federal Reserve meeting.
However, the market was somewhat optimistic about the Fed signaling a possible rate cut. This is especially true after the Federal Reserve began cutting interest rates in early June.
Nonetheless, with the U.S. labor market remaining strong and inflation expectations rising, the general consensus is that the Fed is just getting started.
May data is expected to provide more clues on inflation ahead of the interest rate decision.
Those numbers, also due for release on Wednesday, show inflation expected to remain tight in May, well above the Fed’s 2% annual target range.
Sticky inflation reduces the likelihood of a Federal Reserve rate cut, while the prospect of a prolonged rise in US interest rates constrains the stock market outlook.
S&P 500, Nasdaq hit record highs on AI hype
Amid continued hype around AI, it hit a record high on Tuesday, driven primarily by technology stocks. Apple Inc rose more than 7% to a record high after announcing new AI features, while Microsoft and Alphabet rose about 1% each.
On Tuesday, the S&P 500 closed up 0.3% at 5,375.32 points, while the Nasdaq Composite closed up 0.9% at 17,343.84 points. However, the economically sensitive index continued to lag its peers, down 0.3% to 38,747.42 points.
The gains of most technology stocks did not extend to aftermarket trading.
But Oracle soared nearly 9% after the new AI partnership was announced, which largely overshadowed the company’s disappointing quarterly performance.
