Dow and Nasdaq set to rebound as Microsoft lifts futures

Wall Street is set to open higher on Thursday as strong Microsoft results helped technology stocks recover from their sharp post-Federal Reserve sell-off.

Dow Jones futures were up 225 points, or 0.4%, while S&P 500 futures pointed to a 0.6% gain and the Nasdaq was called 1.3% higher.

The previous session saw the Dow lose 1,153 points or 2.2% to close at 51,594, while the S&P dropped 1.5% to 7,316 and the Nasdaq fell 1.7% to 24,443.

The Fed held rates steady, although three officials voted for an increase. Chair Kevin Warsh offered little guidance about future decisions, prompting investors to reduce risk.

Longer-term Treasury yields continued to climb, with the 10-year yield near 4.69% and the 30-year above 5.2%.

“The selloff wasn’t really about the hold,” said market analyst Kenny Polcari at Slatestone Wealth, but reflected frustration that investors received “no roadmap” for future policy.

However, following earnings after the closing bell, Microsoft surged almost 9% in pre-market trading after quarterly revenue and earnings beat forecasts. Azure growth accelerated to 43%, while capital expenditure of $41 billion was lower than expected.

Meta moved in the opposite direction, falling more than 7% after hours. Revenue rose 28%, but free cash flow slumped as spending on artificial intelligence infrastructure increased.

Microsoft had provided evidence that its AI investments were producing stronger growth and profits, Polcari said, while Meta was “still asking investors to believe the payoff is coming”.

Among others reporting overnight, Qualcomm lost 5.7% after its earnings, while Starbucks was percolating 6.1% higher in pre-market trading.

Attention now turns to second-quarter gross domestic product and the PCE inflation report, followed by earnings from Apple and Amazon after the closing bell.