US stock futures rise as Nasdaq, S&P 500 rebound on Alibaba’s AI pledge and Micron earnings; Fed rate cut debate in focus

US stocks moved higher before Wednesday’s opening bell, aiming to get back to their record-setting rally. The boost came after Alibaba’s new AI spending plans and Micron’s strong results raised hopes for the AI boom.

Nasdaq 100 futures rose 0.3%, S&P 500 futures gained 0.1%, but Dow Jones futures stayed flat since it has fewer tech stocks. Tuesday saw a break in the winning streak for US indexes, with losses in big tech names like the “Magnificent Seven.” Now tech is bouncing back, as stated by Yahoo Finance.

Alibaba and Micron boost AI hopes

Alibaba’s stock jumped more than 9% in premarket trading after CEO Eddie Wu said the company will spend beyond its $50 billion AI budget to keep up as global AI investment races toward $4 trillion. Micron Technology posted stronger-than-expected earnings, and its stock rose 1% premarket. Executives said AI data centers will need a lot more storage by 2026, which should improve chip demand.
Nvidia and OpenAI also signed a $100 billion deal this week, which, along with Alibaba’s pledge, keeps the AI trade very strong. Investors are still cautious because of US interest-rate debates. Fed Chair Jerome Powell said on Tuesday the Fed will be careful about more cuts but left the door open. He also warned that stocks look highly valued.

Fed rate cut debate and key inflation report ahead

Markets are waiting for the Personal Consumption Expenditures (PCE) inflation report on Friday. This is the Fed’s preferred inflation gauge, and it will signal if two more rate cuts this year are realistic. Before that, investors will watch weekly mortgage applications and August home sales data on Wednesday for signs of housing and economic strength, as stated by the report by Yahoo Finance.

Fed unity is weakening. New Fed governor Stephen Miran said rates should be cut by 2%, arguing current levels hurt the economy. He was the only dissenting vote in last week’s meeting and is closely tied to the White House. Even though Miran lost in the 11-1 vote, his influence may grow as the Fed shifts from unity to a more divided debate.

Trending stocks and global market moves

Trending stocks in premarket:

• Lithium Americas (LAC) soared 64% after the Trump administration said it may buy up to a 10% stake in the company.

• General Motors (GM) rose 3% after Citi lifted its price target from $61 to $75.

• Micron (MU) gained 1% following its earnings beat.

GM upgrade, govt shutdown fears

GM got another boost this week as UBS upgraded it to Buy, saying profits look stronger than expected. Analysts note GM has managed tariffs well. Government shutdown fears are back. US funding runs out September 30 unless Congress acts. Republicans need 60 Senate votes but only have 53, while Democrats want healthcare subsidies extended. Trump canceled a meeting with Democrats, raising shutdown risks.

At the same time, Trump gave a fiery UN speech, slamming climate and immigration policies of other countries, but also gave his clearest support yet for Ukraine to reclaim territory. Markets in Asia fell overnight, following Wall Street’s pause: Japan’s Nikkei down 0.4%, Australia’s ASX 200 down 1%, South Korea’s Kospi down 1.1%. But Hong Kong’s Hang Seng rose 0.6%, and China’s Shanghai Composite rose 0.2%, as per the AP report.

Global market updates

US stocks dipped on Tuesday after their all-time highs: S&P 500 fell 0.6%, Dow down 0.2% (88 points), and Nasdaq down 0.9%. Oil prices climbed again. US crude inventories dropped last week, showing tighter supply. Brent rose to $67.90 a barrel, and WTI to $63.69. A stalled Iraq-Turkey pipeline deal also added to concerns, as per the report by Reuters.

Natural gas could power the AI boom. Big energy firms expect AI data centers to double power use by 2028. The US grid is weak, so data centers may turn to off-grid natural gas sources. Energy companies like EQT, Range Resources, Williams, and Expand Energy have already seen stock gains of 13% to 40%+.

Alibaba also announced new cloud data centers in Brazil, France, and the Netherlands, plus plans for Qwen AI models and full-stack AI tech. This lifted Chinese chip stocks like ACM Research (+15%) and NAURA Tech (+10%) in Hong Kong and mainland markets, as per the Bloomberg report.

Finally, September has been surprisingly strong for stocks. Despite seasonal weakness, markets are up 9% for the quarter and 3.7% for the month. Analysts are surprised by the strength but warn October could be tricky, as per the report by Yahoo Finance.

FAQs

Q1. Why are US stock futures rising today?

US stock futures are rising because Alibaba increased its AI spending plans and Micron reported strong earnings, boosting hopes for AI growth.

Q2. What US economic reports are investors waiting for this week?

Investors are waiting for the PCE inflation report on Friday and housing data updates to gauge the economy and future Fed rate cuts.