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U.S. chip stocks rise as TSMC bullish on AI demand

Apple rises on BofA rating upgrade

Spirit Airlines drops on Citi rating downgrade

Birkenstock falls after Q4 profit miss

Futures: Dow down 0.06%, S&P up 0.36%, Nasdaq up 0.73%

Updated at 7:04 a.m. ET/1204 GMT

By Johann M Cherian and Ankika Biswas

Jan 18 (Reuters)Futures tracking the S&P 500 and the Nasdaq rose on Thursday, buoyed by chip stocks, while investors kept an eye out for clues on the timing of interest rate cuts and the economic outlook as more earnings roll in.

U.S.-listed shares TSM.N of Taiwan Semiconductor Manufacturing (TSMC) jumped 5.5% in premarket trading after the world’s largest contract semiconductor maker projected a more than 20% growth in 2024 revenue on booming demand for high-end chips used in artificial intelligence applications.

Nvidia NVDA.O, Microchip Technology MCHP.O, Marvell Technology MRVL.O and Advanced Micro Devices AMD.O rose between 1.6% and 3.2%.

Megacap stocks such as Microsoft MSFT.O, Tesla TSLA.O and Meta Platforms META.O also gained around 1% each, as U.S. Treasury yields ticked lower.

Apple AAPL.O climbed 1.6% after BofA Global Research upgraded the iPhone-maker’s stock to “buy” from “neutral”.

The S&P 500 .SPX ended its second session in the red on Wednesday, moving farther away from its highest intraday level notched in 2022 after a strong December retail sales figure, and as policymakers continue to talk down hopes for an early start to interest rate cuts.

“We’ve seen a concerted effort from assorted central bankers to dial back expectation of early rate cuts … and some solid U.S. retail sales numbers torpedoed the idea that we would see early rate cuts in March,” said Michael Hewson, chief market analyst at CMC Markets.

The U.S. Federal Reserve is walking a tightrope to bring inflation under control without causing a growth slowdown, as the central bank’s “Beige Book” report, a snapshot of the economy’s health, showed economic activity saw little or no change from December through early January.

Money market participants now see a near-60% chance for a 25-basis point rate cut in March, lower from an over-80% probability a month ago, according to the CME Group’s FedWatch Tool.

Investors will also parse comments by Atlanta Fed President Raphael Bostic, a voting member this year, for clues on the timing of rate cuts.

On the economic data front, weekly jobless claims and housing data for December are both due at 8:30 a.m. ET.

At 7:04 a.m. ET, Dow e-minis 1YMcv1 were down 22 points, or 0.06%, S&P 500 e-minis EScv1 were up 17.25 points, or 0.36%, and Nasdaq 100 e-minis NQcv1 were up 122.5 points, or 0.73%.

HumanaHUM.N fell 10.9% as the health insurer forecast fourth-quarter medical costs to be higher than previously expected. Peer UnitedHealth UNH.N, a Dow component, also lost 2.6%.

BirkenstockBIRK.N lost 7% after the German sandal maker missed quarterly profit expectations in its first result since going public.

Spirit AirlinesSAVE.N fell 6% after Citigroup downgraded the stock to “sell” from “neutral”. The company’s shares have already lost nearly 60% in two sessions after a judge blocked the airline’s planned merger with rival JetBlue Airways JBLU.O.

Discover Financial ServicesDFS.N tumbled 10.1% after reporting a 62% fall in fourth-quarter profit.

Boeing BA.N gained 2% after India’s Akasa Air said it has ordered 150 of the planemaker’s 737 MAX narrowbody aircraft.

(Reporting by Johann M Cherian in Bengaluru; Editing by Pooja Desai and Shounak Dasgupta)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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