U.S. equity futures traded modestly higher on Thursday as investors digested the Federal Reserve’s latest policy announcement and a fresh round of earnings from some of the world’s largest technology companies. Although the central bank left interest rates unchanged, a split vote among policymakers and ongoing inflation concerns kept markets on edge. Meanwhile, Microsoft (NASDAQ:MSFT) rallied after its results, while Meta Platforms (NASDAQ:META) moved sharply lower as investors scrutinised each company’s artificial intelligence spending strategy.
Futures Recover Following Wall Street Decline
By 01:55 ET (05:55 GMT), futures linked to the Dow Jones Industrial Average were up 27 points, or 0.1%. S&P 500 futures gained 15 points, or 0.2%, while Nasdaq 100 futures rose 133 points, or 0.5%.
The modest gains followed a weaker session on Wall Street, where investors focused on comments from Federal Reserve Chair Kevin Warsh after the conclusion of the central bank’s latest policy meeting.
Semiconductor stocks remained under heavy selling pressure. The Philadelphia Semiconductor Index dropped 5.33%, extending its losses over the past five trading sessions to more than 14%. The Nasdaq 100 also slipped into correction territory after falling over 10% from its recent high.
Market sentiment has been weighed down by concerns that the enormous investment flowing into AI infrastructure—including advanced chips and data centres—may take longer than expected to generate meaningful returns. Increased competition from Chinese technology companies has added to investor caution.
Those concerns came into sharper focus after Microsoft and Meta became the first major AI-focused technology companies to publish quarterly earnings.
Geopolitical developments also remained in focus after renewed U.S. military action involving Iran. Brent crude futures rose 1.4% to $92.01 per barrel after surging roughly 7% during Wednesday’s session.
Fed Signals Readiness Despite Holding Rates
The Federal Reserve kept its benchmark interest rate unchanged within a target range of 3.5% to 3.75%, although three members of the policy committee voted in favour of a rate increase.
Officials continue to face elevated inflation, which remains well above the central bank’s 2% objective, largely due to higher energy prices linked to the conflict involving Iran.
While June inflation figures were softer than expected, persistent volatility in oil markets has complicated the inflation outlook.
Although raising interest rates could help contain price pressures, policymakers must also consider the potential impact on a labour market that has shown limited hiring and subdued layoffs.
Kevin Warsh, who was overseeing only his second policy decision as Federal Reserve Chair, stressed that leaving rates unchanged should not be interpreted as a lack of willingness to act.
“There was nothing inertial about our discussions,” Warsh said.
Asked whether additional rate increases could help reduce inflation, Warsh responded that they remained an available policy tool but added, “I wouldn’t say it’s in isolation.” He also suggested that higher long-term Treasury yields since the June meeting were already helping tighten financial conditions.
U.S. Treasury yields rose following his remarks as investors searched for signals about the Fed’s next policy move.
“[T]he vague and arguably counterproductive communications from […] Warsh during the press conference make forecasting the Fed’s next move even trickier than it already was,” said Thomas Ryan, Senior North America Economist at Capital Economics.
Microsoft Delivers Another Strong Quarter
Microsoft exceeded market expectations after reporting continued strength across its cloud computing operations and growing adoption of its AI services.
Revenue for the quarter ended in June climbed 18% to $90 billion, while net income surged 31% to $35.8 billion.
Chief Executive Satya Nadella also disclosed that annual revenue generated by Microsoft’s AI-powered Azure cloud platform exceeded $100 billion for the first time.
Because Microsoft rarely reports Azure’s revenue separately, the announcement attracted considerable attention from investors comparing its performance with Google’s cloud business.
The software company also reaffirmed its commitment to AI investment. Capital expenditure reached $41 billion during the quarter, up nearly 70% year over year, lifting annual capital spending to $145.3 billion.
The strong Azure performance reassured investors that the company’s aggressive AI investment strategy continues to deliver results, sending Microsoft’s shares more than 7% higher in after-hours trading.
Meta Falls as Spending Plans Concern Investors
Meta Platforms posted record second-quarter revenue of $60.8 billion, but its shares fell more than 7% after the results were released.
The decline reflected investor concern over higher spending expectations. Meta increased its minimum capital expenditure forecast for the year to $130 billion from $125 billion previously, while maintaining the upper end of its guidance at $145 billion.
Although executives were expected to provide greater clarity around AI monetisation during the earnings call, investors remained cautious.
Meta also reported free cash flow of less than $1 billion, while quarterly net income declined 14% to $18.3 billion.
Its revenue outlook for the current quarter also disappointed expectations, and the company warned that ongoing legal proceedings related to the impact of social media on younger users could result in material financial losses.
Attention now shifts to Apple and Amazon, which are both scheduled to report quarterly earnings later on Thursday.
Qualcomm, Starbucks and Chipotle Also Update Investors
Elsewhere, Qualcomm (NASDAQ:QCOM) shares moved lower in extended trading after the semiconductor company issued weaker-than-expected guidance.
Chief Executive Cristiano Amon said the business intends to raise product prices to offset rising manufacturing and memory costs, adding that the wider semiconductor industry continues to experience supply chain challenges driven by strong demand for AI-related data centres.
Qualcomm posted adjusted third-quarter earnings per share of $2.21, narrowly missing FactSet estimates. Revenue declined 4% to $9.95 billion but still came in ahead of analyst forecasts.
Starbucks (NASDAQ:SBUX) delivered quarterly earnings above expectations, supported by improving customer traffic across North America and continued progress in its turnaround strategy. Its shares rose approximately 4% in after-hours trading.
Chipotle Mexican Grill (NYSE:CMG) also reported stronger-than-expected revenue and earnings, helped by continued restaurant expansion and branding initiatives. The company raised its full-year comparable sales outlook, sending its shares higher after the market closed.
