Futures positive ahead of Fed decision; Big Tech earnings also in focus

Wall Street

All eyes on the Fed

U.S. stock futures crept higher in premarket hours on Wednesday, as the Federal Open Market Committee (FOMC) prepares to announce its decision on interest rates later in the day.

Economists widely expect the Fed to raise interest rates by another 75 basis points at the conclusion of its two-day policy meeting today. That would put its benchmark interest rate in a range of 2.25% to 2.5%.

Markets are also pricing in a 26.1% probability for a 100 bps hike, according to the CME FedWatch tool.

The Fed is expected to announce its decision at 2 p.m. ET, followed by President Jerome Powell’s press conference 30 minutes later.

Traders will be listening carefully for clues Powell may provide about the Fed’s intentions at its next meeting in September.

At 5:10 a.m. ET, Dow futures rose 162 points, or 0.51% to 31,894. S&P 500 futures jumped 40.25 points, or 1.03% to 3,963 while Nasdaq 100 futures rallied 200.75 points, or 1.66% to 12,313.25.

Alphabet posts strong cloud and search results

On the earnings front, shares of Google owner Alphabet (GOOG) are trading in the green territory despite reporting earnings that were below analysts’ expectations after markets closed on Tuesday.

Alphabet posted second-quarter earnings of $1.21 per share, missing the consensus estimate of $1.31 per share. Revenue came in at $69.69 billion, up 13% from the same period last year but below the consensus estimate of $70.35 billion.

Revenue from its Google Cloud segment was $6.276 billion, compared to $4.628 billion in the prior-year quarter. Google Search increased to $40.689 billion from $35.845 billion last year.

Alphabet stock was up 3.67% to $108.87 a share in premarket hours.

Microsoft shares pop on upbeat guidance

Meanwhile, Microsoft (MSFT) posted its slowest earnings growth in two years, weighed by an unfavorable foreign exchange rate environment and Covid-19 shutdowns in China.

Microsoft reported earnings of $2.23 pers share in the fourth quarter, missing Wall Street’s estimates of $2.30 per share. The tech giant had revenue of $51.9 billion in the second quarter, up 12% from last year but below estimates of $52.47 billion.

Chief Financial Officer Amy Hood said on an earnings call that the company expects revenue and operating income on a currency adjusted basis to jump by a double-digit percentage.

Microsoft stock climbed 3.75% to $261.35 a share in premarket hours.

Meta earnings due after the closing bell

Still on earnings, shares of Facebook’s parent Meta Platforms (META) edged up in premarket hours, amid heightened anticipation of its June-quarter earnings, due after the market close today.

Analysts expect the social media giant to post earnings of $2.54 a share on revenue of $28.9 billion. Meta shares were marked 2.54% higher to $163.20 apiece in premarket hours.

Other notable companies scheduled to report today include Boeing (BA), Qualcomm (QCOM), Bristol Myers Squibb (BMY), and T-Mobile (TMUS).