Tech Stocks Soar as Investors Eye Fed Chair Powell's Testimony

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On Tuesday, U.S. stock index futures surged, propelled by megacap technology and semiconductor stocks, extending Monday’s bullish trend. Investors eagerly await Federal Reserve chair Jerome Powell’s testimony, seeking clues on monetary policy direction.

Both the S&P 500 and Nasdaq closed at record highs on Monday, boosted by a rally in chip stocks. The Philadelphia semiconductor index hit its highest level in over two weeks, marking the 35th record close this year for the S&P 500. AI-linked and technology shares have maintained a bullish sentiment, despite uncertainties surrounding the central bank’s rate-cut plans.

Intel shares climbed 3.8% in premarket trading following a 6% gain on Monday. AI-chip leader Nvidia saw a 1.1% rise, and Marvell Technology was up 1.0%. Powell’s upcoming Congressional testimony, beginning at 10 a.m. ET, will be closely monitored for insights on the Federal Reserve’s assessment of economic trends, including a cooling labor market. Analysts at Unicredit expect Powell’s comments to be balanced or slightly dovish, reflecting ongoing disinflation and a gradual economic slowdown.

Market expectations diverge from policymakers, with projections showing just one rate cut this year, compared to market bets on a 50 basis points easing and a nearly 74% chance of a 25 bps cut by September, as per CME’s FedWatch.

Rate-sensitive tech giants like Microsoft, Amazon, Alphabet, and Meta were up 0.3% to 0.5%. WisdomTree’s senior economist Jeremy Siegel noted, “The bull market is continuing, and with potential rate cuts, it could extend further.”

This week, key inflation data will be released, with Thursday’s consumer price index and Friday’s producer price index providing insights into inflationary trends. Investors also look forward to second-quarter corporate earnings. Analysts predict a 10.1% rise in S&P 500 companies’ earnings per share for Q2, up from 8.2% in Q1, according to LSEG I/B/E/S data.

As of 5:53 a.m. ET, futures showed upward trends: Dow e-minis up 47 points (0.12%), S&P 500 e-minis up 13.75 points (0.24%), and Nasdaq 100 e-minis up 83.25 points (0.40%). Tempus AI shares rose 3.9% after J.P. Morgan initiated an overweight rating. Eli Lilly shares gained 0.7% on favorable data for its weight loss treatment Mounjaro compared to Novo Nordisk’s Wegovy.

(Disclaimer: With inputs from agencies.)