S&P 500 futures rise after Meta and Microsoft post quarterly beats: Live updates

S&P 500 and Nasdaq 100 futures surged post-market, up 0.7% and 1% respectively, following robust quarterly earnings from Microsoft (+8%) and Meta Platforms (+11%), with Microsoft's Azure cloud revenue exceeding $75 billion. This positive momentum contrasts with Wednesday's regular session, where major indices declined after Federal Reserve Chair Powell indicated no immediate rate cuts, despite a newly announced US-South Korea trade deal setting tariffs lower than initially threatened. Markets now anticipate Thursday's PCE inflation data and further key tech earnings from Apple and Amazon.

Analysis

A clear divergence has emerged between strong corporate performance in the technology sector and broader market sentiment weighed down by monetary policy concerns. In after-hours trading, S&P 500 and Nasdaq 100 futures advanced 0.7% and 1.0% respectively, propelled by robust earnings from Microsoft and Meta. Microsoft's stock rose approximately 8% after its Azure cloud unit's annual revenue surpassed $75 billion, while Meta surged about 11% on the back of an upbeat third-quarter sales forecast that exceeded analyst estimates. This post-market strength contrasts sharply with the regular session's performance, where the S&P 500 and Dow Jones Industrial Average declined 0.12% and 0.38% respectively. The catalyst for the daytime weakness was Federal Reserve Chair Jerome Powell's signaling that the central bank is not yet prepared to cut interest rates, despite holding the policy rate steady at 4.25%-4.50% with two dissenting governors. Adding a positive geopolitical element, the U.S. reached a trade deal with South Korea, setting tariffs at 15%, below the 25% previously threatened. However, an analyst from Baird noted that market valuations are currently "stretched" after a six-day record run, making equities sensitive to even "slightly hawkish" commentary and suggesting the market may be due for consolidation. Upcoming catalysts, including the PCE inflation index and earnings from Apple and Amazon, will be critical in determining the market's near-term direction.

Key Decisions for Investors

• Consider the performance divergence between technology sector leaders with strong earnings, like Microsoft and Meta, and the broader market, which remains sensitive to the Federal Reserve's hawkish policy stance.
• Anticipate increased market volatility and potential consolidation, as stretched valuations will be tested by crucial upcoming catalysts including the PCE inflation report and earnings from Apple and Amazon.
• Maintain a cautious approach towards rate-sensitive assets given Chair Powell's reluctance to signal imminent rate cuts, and monitor upcoming economic data closely as it will heavily influence future Fed decisions.
• Factor in the de-risking from geopolitical events, such as the finalized US-South Korea trade deal at a lower-than-feared tariff rate, which could serve as a tailwind for globally-exposed equities.