Nasdaq futures rise as SK Hynix earnings fuel chip rally

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Highlights

Nasdaq futures gained 0.37% before Fed.
Fed expected to hold rates at 3.75%-4%.
Big Tech earnings remain in focus.

Nasdaq-100 futures rose 0.37% to 29,922.25, while S&P 500 futures gained 0.11% to 7,766.75. Dow Jones futures fell 0.24% to 52,451 as traders balanced expectations for steady interest rates against a busy technology earnings calendar, CNBC reports.

Fed decision takes center stage

The Federal Reserve is expected to leave its benchmark interest rate unchanged at 3.75% to 4% when its two-day policy meeting concludes Wednesday. Policymakers raised borrowing costs by a quarter percentage point in September as inflation remained a concern.

CME FedWatch data indicated roughly a 90% probability of no change at this meeting. Investors will therefore focus on Chair Kevin Warsh's comments for indications of whether additional rate increases could follow later this year.

The decision is scheduled for 2 p.m. ET. Any shift in the outlook for borrowing costs could affect Treasury yields, equity valuations, and demand for growth stocks, particularly technology companies whose earnings expectations extend several years into the future.

Chip stocks advance after SK Hynix profit surge

Semiconductor shares gained before the opening bell after SK Hynix reported record quarterly profit, strengthening expectations for demand tied to AI infrastructure. U.S.-traded shares of the Korean memory-chip producer rose nearly 11%.

Micron Technology advanced approximately 4%, while Arm Holdings gained 2%. Intel, Marvell Technology, and Advanced Micro Devices each rose nearly 2%, extending the rally across memory, processor, and semiconductor infrastructure companies.

Investors are also awaiting quarterly results from Alphabet and Microsoft after Wednesday's closing bell. Alphabet shares rose more than 1% in premarket trading, while Microsoft slipped slightly.

The reports will provide fresh evidence about spending on AI computing infrastructure and whether technology companies can sustain the investment levels that have supported semiconductor demand.

Market reaction reflects a divided outlook

The strength in Nasdaq futures contrasted with losses in Dow futures, suggesting investors were favoring technology shares over the broader market. Recent concerns about the cost of AI development have weighed on the sector, but strong chip earnings have provided some reassurance about underlying demand.

Overseas markets were similarly divided. South Korea's Kospi jumped 6.84%, while Japan's Nikkei 225 gained 1.24%. European stocks were mixed, with the Stoxx 600 falling 0.10% while Germany's DAX gained 0.33%.

The next test for U.S. equities will come from the combination of Fed guidance and corporate earnings. Strong results from Alphabet and Microsoft could reinforce the semiconductor rally, while signals of further monetary tightening could limit gains by pushing bond yields higher.

We also reported gold prices fall as investors brace for Fed guidance on interest rates.

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