US stocks rise as Federal Reserve interest-rate decision and AI earnings loom

US stocks rose ahead of earnings from two of the world’s biggest spenders on artificial intelligence and a Federal Reserve interest-rate decision where markets still see room for a hike.

S&P 500 futures climbed 0.2%. Those for the Nasdaq 100 fluctuated after the latest selloff in chipmakers left the index on the brink of a technical correction. Treasuries halted a three-day run of gains as oil rallied, while markets assign about a 35% chance of a Fed rate increase. The dollar barely budged.

Earnings from Meta Platforms Inc. and Microsoft Corp. arrive as the AI trade is faltering, with traders questioning whether the costly buildout of the technology can deliver adequate returns. While both companies are expected to deliver rapid growth, Wall Street will look for evidence that their outlays are justified.

Chipmakers have also been punished amid doubts over whether lofty margins can be sustained. SK Hynix Inc. plunged nearly 10% in South Korea even after reporting a more than fivefold rise in operating profit, extending a rout that has wiped more than $700 billion off its market value in little more than a month.

“I hope that Meta and Microsoft can confirm the capex spree in the industry and reassure the market about semiconductors,” said Fares Hendi, a portfolio manager at Société de Gestion Prévoir in Paris.

In Europe, the Stoxx 600 swung between gains and losses on a busy day for earnings. The region’s luxury sector saw diverging fortunes for two of its biggest names, with Kering SA rallying after Gucci sales topped estimates and Hermès International SCA getting hit by a lack of growth in China.

The latest flare-up in the Middle East had little knock-on effect on stocks. A dayslong lull in hostilities came to an abrupt end after Iran fired on American forces overnight and the US and Saudi Arabia struck Tehran-backed militias in Iraq. Brent rose 4.9%% to $88.18, while Treasury yields climbed across the curve.

For stocks, a dovish signal from the Federal Reserve to hold rates at current levels would be “the best outcome,” according to the JPMorgan Market Intelligence team.

Their scenario analysis shows a 28% probability of the central bank keeping rates unchanged, while sounding accommodative on the inflation outlook. That would trigger gains of between 0.5% and 1% in the S&P 500. Their base case, with 50% odds, is for a hawkish hold, where the Fed warns about staying vigilant on inflation.

“It’s really rare to have the market split just hours ahead of a Fed decision,” said Amélie Derambure, a senior multi-asset portfolio manager at Amundi. “That means some investors will necessarily be hurt. A hike could have harsh consequences on equities if it announces a fresh cycle.”

Corporate News:

Biogen Inc. reported quarterly revenue and adjusted earnings that beat analysts’ expectations as sales of newly acquired kidney and eye-disease drugs helped offset declining revenue from multiple sclerosis medicines.

BMW AG is offering voluntary severance packages to thousands of its workers in Germany, as the carmaker tries to become leaner to better compete with rivals from China.

Deutsche Bank AG’s revenue from fixed-income trading jumped in the second quarter as the unit outperformed most of its US peers.

UBS Group AG announced a new $3 billion share buyback program to run until mid-2027, giving investors more clarity on payouts amid ongoing uncertainty over the bank’s future capital requirements.

Standard Chartered Plc unveiled a fresh $1 billion share buyback as second-quarter earnings beat expectations, while it booked more charges tied to the conflict in the Middle East.

Porsche AG reaffirmed its full-year earnings guidance after first-half profitability rose, offering tentative signs that the sports-car maker’s turnaround is beginning to gain traction.

Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.2% as of 7:26 a.m. New York time

Nasdaq 100 futures rose 0.3%

Futures on the Dow Jones Industrial Average fell 0.3%

The Stoxx Europe 600 was little changed

The MSCI World Index was little changed

Currencies

The Bloomberg Dollar Spot Index was little changed

The euro was little changed at $1.1386

The British pound was little changed at $1.3293

The Japanese yen rose 0.1% to 163.67 per dollar

Cryptocurrencies

Bitcoin rose 1% to $64,449.18

Ether fell 0.2% to $1,912.59

Bonds

The yield on 10-year Treasuries advanced two basis points to 4.63%

Germany’s 10-year yield advanced three basis points to 3.13%

Britain’s 10-year yield advanced four basis points to 4.99%

Commodities

West Texas Intermediate crude rose 4.8% to $83.03 a barrel

Spot gold was little changed