The major index futures indicate a lower opening on Thursday, suggesting that stocks are poised for a decline after concluding Wednesday’s trading session with mixed results amid late-day volatility. The markets are expected to experience downward pressure in the early session due to a negative response to earnings announcements from several prominent technology firms. Shares of Meta Platforms are plunging by 9.7 percent in pre-market trading after the Facebook parent reported better than expected third quarter results but forecast an increase in AI spending. Software giant Microsoft is also experiencing notable pre-market weakness following the release of fiscal first quarter results that surpassed estimates, while also indicating that capital spending growth will accelerate this fiscal year. Conversely, shares of Alphabet are experiencing a notable increase of 7.9 percent in pre-market trading following the parent company’s third quarter results, which exceeded expectations on both revenue and earnings fronts. Drug giant Eli Lilly is also likely to see initial strength after reporting better than expected third quarter results and boosting its full-year revenue guidance.
Positive developments from the much-anticipated meeting between President Donald Trump and his Chinese counterpart Xi Jinping could mitigate potential early declines. The United States has consented to lower tariffs on fentanyl-related imports from China to 10 percent, down from the previous rate of 20 percent. In return, China has committed to reinstating its purchases of U.S. soybeans. China will suspend the implementation of new export controls on rare earths, while the U.S. will suspend its 50 percent penetration rule on export controls in return. Following a robust performance during the majority of the trading session, equities experienced significant volatility in the latter part of the day on Wednesday. The major averages exhibited significant volatility, oscillating around the neutral point before ultimately finishing in a mixed state. In a notable market development, the tech-heavy Nasdaq advanced by 130.98 points, representing a 0.6 percent increase, reaching a new record closing high of 23,958.47. Conversely, the S&P 500 experienced a slight decline, decreasing by 0.30 points, or less than a tenth of a percent, to settle at 6,890.59. Meanwhile, the Dow Jones Industrial Average saw a decrease of 74.37 points, equivalent to a 0.2 percent drop, closing at 47,632.00.
The late-day volatility observed was a direct response to the remarks made by Federal Reserve Chair Jerome Powell subsequent to the central bank’s monetary policy announcement. Although the Fed reduced interest rates by an additional quarter point, as anticipated, Powell’s comments following the meeting somewhat tempered the optimism surrounding a potential rate cut in December. Powell indicated that a subsequent decrease in rates in December is “not a foregone conclusion,” highlighting that Fed officials held “strongly differing views about how to proceed” during the last meeting of the year. Emphasizing the significant uncertainty stemming from the government shutdown that is postponing essential data, Powell remarked on the “growing chorus” advocating for the Fed to “wait a cycle” before proceeding with further rate cuts. In the wake of Powell’s remarks, the reports reveals that the probability of the Federal Reserve maintaining the current interest rates in December has surged to 34.1 percent, a significant increase from the mere 9.1 percent observed the previous day.
The remarks from the Fed chief followed the central bank’s announcement of a decision to reduce the target range for the federal funds rate by 25 basis points, bringing it to a range of 3.75 percent to 4.0 percent. The central bank has reiterated a change in the balance of risks, highlighting that the downside risks to employment have increased in recent months. In spite of the late-day fluctuations observed in the broader markets, computer hardware stocks exhibited considerable resilience, propelling the NYSE Arca Computer Hardware Index to a remarkable 6.3 percent increase, achieving a record closing high. Seagate Technology led the sector higher, skyrocketing by 19.1 percent after reporting better than expected fiscal first quarter results. Oil service stocks maintained a robust performance, buoyed by a resurgence in crude oil prices, while semiconductor stocks exhibited notable strength. In contrast, interest rate-sensitive commercial real estate, housing, and airline stocks faced declines of 2.6 percent, 2.3 percent, and 1.4 percent, respectively.