U.S. stock futures rise on Fed cut bets, strong earnings
Investing.com - U.S. stock futures inch lower, with traders gearing up for a week of tech earnings and closely-monitored economic indicators. Chipmaker Micron will be one of the headliners of tech results in the coming days, as analysts hunt for further cues about the trajectory of a boom in enthusiasm around artificial intelligence. Meanwhile, shares of Indian IT firms slip after the introduction of new U.S. visa fee, and BYD’s shares fall on a report that Warren Buffett’s Berkshire Hathaway has entirely exited its stake in the electric carmaker.
1. Futures edge lower
U.S. stock futures pointed down on Monday, as investors geared up for a new trading week that will feature key tech industry earnings and crucial economic data.
By 03:01 ET (07:01 GMT), the Dow futures contract had slid by 87 points, or 0.2%, S&P 500 futures had declined by 12 points, or 0.2%, and Nasdaq 100 futures had dropped by 46 points, or 0.2%.
The main averages on Wall Street logged a second straight day of record closing highs on Friday, while trading volume jumped to its highest level since April. The benchmark S&P 500 and tech-heavy Nasdaq Composite posted a third consecutive weekly gain, buoyed in large part by the Federal Reserve’s decision to slash interest rates by 25 basis points and signal that more reductions could be coming in the months ahead.
In individual stocks, shares of shipping group FedEx advanced on a better-than-expected quarterly financial report and Apple ticked up after analysts at JPMorgan Chase raised their price target for the iPhone-maker.
2. Micron among tech earnings ahead this week
Attention this week now turns to a fresh slate of tech industry earnings, with analysts suggesting that the figures may provide some updated insight into the state of a boom in enthusiasm around artificial intelligence.
AI’s soaring popularity has underpinned a surge in broader stock markets, making any developments around the technology or the companies looking to harness it a central focus for investors.
On Tuesday, Micron is due to report after the closing bell. Sentiment has been upbeat around the chipmaker, especially in the wake of blockbuster returns from peers like Broadcom and Oracle as well as a range of favorable sell-side preview notes, analysts at Vital Knowledge said.
Electronics component manufacturer and Apple-supplier Jabil, which has been betting heavily that the data centers powering AI will fuel strong infrastructure services demand, will post quarterly earnings on Thursday. Consulting giant Accenture is set to unveil results on the same day, although analysts have flagged worries around the impact of AI on its business.
3. Tech shares after Trump H-1B visa order
Mega-cap U.S. tech firms were steady in Frankfurt trading following the introduction of a new visa fee by U.S. President Donald Trump.
On Friday, the White House announced that it would ask firms to pay $100,000 per year for H-1B working visas, leading a host of businesses -- such as Microsoft, Alphabet and Goldman Sachs -- to advise workers not to leave the U.S. or return to the country immediately.
IT majors in India, including Tech Mahindra, Tata Consultancy, and Infosys, were among a number of groups whose shares fell on the news. The visa has traditionally been a means for Indian tech companies to place workers into projects in the U.S., where these businesses generate a significant portion of their revenue.
Indian tech has benefited greatly from the outsourcing of U.S.-based labor and operations to cheaper, local businesses. Trump’s increased scrutiny of this practice could herald more future headwinds. Trump last month also doubled tariffs against India to 50% over its buying of Russian oil.
4. BYD shares slip on report Berkshire Hathaway has exited stake
BYD fell in Hong Kong and Chinese trade on Monday following a report that Warren Buffett’s Berkshire Hathaway entirely sold down its stake in the electric vehicle giant, after years of logging hefty profits on the position.
Hong Kong-listed shares of BYD, through which Berkshire held its stake, fell 3.5% to HK109.50. Losses in the EV maker also pressured the Hang Seng, which fell 1.0%. Mainland BYD shares fell 1.0%.
CNBC reported a confirmation from Berkshire Hathaway that the conglomerate had entirely exited its stake in BYD. This was after the company disclosed in a filing earlier this year that the value of its investment in BYD had dropped to zero.
Berkshire has begun steadily offloading its stake in BYD -- which it acquired over a decade ago -- in mid-2022, and by last year, had sold its holdings to less than 5% of the EV maker’s outstanding shares.
5. Gold rises to all-time high
Gold prices touched a new record peak on Monday, as the prospect of more U.S. interest rate cuts after the Fed’s recent borrowing cost drawdown supported the outlook for bullion.
Markets remained biased towards gold before several more key U.S. economic readings this week, including the Fed’s preferred inflation gauge. Several Fed policymakers are due to speak as well.
Lower rates bode well for non-yielding assets such as the yellow metal, given that they lower the opportunity cost of investing in the sector. Broader metal prices have also advanced after the Fed’s cut.
Spot gold rose 0.9% to $3,715.50 an ounce, while gold futures rose 1.2% to $3,750.20/oz by 03:32 ET.