Wall Street set for steady open on Fed rate cut hopes; earnings in focus
By Nikhil Sharma and Pranav Kashyap
(Reuters) -Wall Street was poised for a steady start on Wednesday, as ongoing optimism about Federal Reserve interest rate cuts kept markets afloat and investors assessed a fresh wave of corporate earnings.
At 8:15 a.m. ET, S&P 500 E-minis were up 7.25 points, or 0.1%, Nasdaq 100 E-minis were 14.5 points, or 0.06%, higher and Dow E-minis were up 103 points, or 0.23%.
Advanced Micro Devices dropped 5.4% in premarket trading after the chipmaker reported disappointing revenue from data center, an artificial intelligence chip segment that investors have been betting for higher growth.
AI server maker Super Micro also underwhelmed as it missed fourth-quarter revenue estimates, sending its shares plunging 17%. Shares of rivals Dell Technologies and HP Enterprise fell 3% and 1.4%, respectively.
Uber added 1.3% after unveiling a $20 billion stock buyback program and forecasting third-quarter bookings above Wall Street estimates.
Walt Disney posted better-than-expected quarterly results and raised its full-year earnings guidance, but its shares fell 2.2%.
Airbnb, DoorDash and Lyft will report their results after the market closes.
The damage from the U.S. trade war on quarterly results of Yum Brands, Caterpillar and Marriott, as well as a series of weak economic data pushed Wall Street lower on Tuesday.
“Sectors more exposed to tariffs and regulatory changes are seeing negative earnings revisions as well as weaker guidance,” said Nicole Inui, head of equity strategy at HSBC Americas.
“We expect a more substantial hit in the third quarter,” and “earnings growth to slow in the second half, reflecting tariff pressure and a weaker economy.”
Tuesday’s data showed U.S. services sector activity unexpectedly stalled in July, highlighting the Trump administration’s tariff-related strain on businesses.
The setback followed last week’s troubling jobs report, which showed slowing employment growth and downward revisions for previous months – fueling concerns about a weakening labor market.
As a result, traders are now betting heavily on a September Fed rate cut, with odds soaring to 89.4% from just 46.7% last week, according to CME Group’s FedWatch tool. Traders also bet on at least two cuts by the end of 2025.
Trump’s tariff threats showed no signs of easing. The president on Tuesday said he would impose a “small tariff” on pharmaceutical imports before hiking it to triple-digit percentage in a year or two.
Trump also announced plans for new levies on semiconductors and chips in the “next week or so.”
Adding to the uncertainty, Trump will decide on a nominee to replace outgoing Fed Governor Adriana Kugler by the end of the week, while saying he has narrowed the possible replacements for Fed Chair Jerome Powell to a short list of four.
Among other movers, Arista Networks jumped 11.1% after the cloud networking firm forecast third-quarter revenue above analysts’ estimates.
McDonald’s advanced 3.6% after the burger chain beat expectations for global comparable sales in the second quarter, thanks to demand for affordable meal options.
San Francisco Fed President Mary Daly, Boston Fed chief Susan Collins and Fed Board Governor Lisa Cook are scheduled to speak later in the day.
(Reporting by Nikhil Sharma; Editing by Maju Samuel)
