US stocks rose before the bell on Wednesday, eyeing a return to their record-setting rally as Alibaba’s (BABA) spending plans and Micron Technology’s (MU) results lifted AI prospects.
Nasdaq 100 futures (NQ=F) moved up roughly 0.3%, while those on the S&P 500 (ES=F) nudged 0.2% higher. Contracts on the Dow Jones Industrial Average (YM=F), which includes fewer tech stocks, were up about 0.1%.
A turnaround in tone on techs is helping stocks shape up for a slight comeback, after the major gauges snapped a win streak on Tuesday amid losses for “Magnificent Seven” megacaps.
Alibaba stock jumped over 9% in premarket as investors welcomed the Chinese tech giant’s pledge to hike its AI spending beyond its original $50 billion target. The boost is needed for Alibaba to keep pace as global investment in AI surges to $4 trillion, its CEO said. At the same time, Micron’s stronger-than-expected quarterly earnings delivered another positive signal for the AI trade, helping lift shares slightly.
Debate over the prospects for US interest-rate cuts — the big focus for markets right now — appeared to keep a lid on gains. Comments from Federal Reserve officials this week have hinted at growing disagreement on what the path of policy should be, given the cracks showing in the labor market.
Fed Chair Jerome Powell reiterated in a speech on Tuesday that the central bank would proceed cautiously on further rate cuts, even as he left the door open to more easing. He also described stocks as “fairly highly valued.”
Wall Street is now counting down to the release of the Fed’s preferred inflation gauge, the Personal Consumption Expenditures index, on Friday. Markets are watching for reassurance that inflation isn’t posing a threat to high expectations for two more rate cuts this year.
Before that, updates on weekly mortgage applications and August home sales on Wednesday will provide a window into the housing market and the US economy more broadly.
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