U.S. stock index futures inched upward on Thursday as market participants absorbed the latest set of results and guidance from several large technology companies and reacted to the Federal Reserve’s widely anticipated hold on interest rates.
In premarket activity, Meta surged 7.9% after pairing an optimistic revenue outlook with plans to raise its capital expenditure budget by 73% for the year. Tesla advanced 2.9% after management unveiled intentions to more than double capital spending, pushing planned investment to a record level. Conversely, Microsoft declined 6.4% after its cloud revenue fell short of expectations, rekindling concerns that the substantial spending tied to its alliance with OpenAI is not yet producing rapid monetization.
The most recent disclosures from three members of the so-called "Magnificent Seven" indicate that investors may tolerate sizable AI-related outlays when there is a clear line of sight to returns. That group constitutes roughly one-third of the S&P 500’s total market capitalization, has been a principal driver of the prolonged rally in U.S. equities, and continues to trade with elevated valuation multiples.
"Traders are no longer rewarding the biggest spenders, and Microsoft’s elevated capex appears to have spooked them, leaving doubts that the continued spend will deliver a clear path to profit," said Jake Behan, head of capital markets at Direxion. "Capex remains the market’s central concern for hyperscalers, as trader focus shifts from growth optics to the timing and payoff of AI investment."
At 05:21 a.m. ET, Dow E-minis were up 42 points, or 0.09%. S&P 500 E-minis were higher by 13.5 points, or 0.19%, and Nasdaq 100 E-minis were up 67.5 points, or 0.26%.
Apple rose 0.5% ahead of releasing its results after the bell. Meanwhile, IBM jumped 8.3% after reporting fourth-quarter results that topped estimates.
Federal Reserve decision and market reaction
The U.S. central bank held its policy rate in the 3.5% to 3.75% range in a move that was widely expected. Chair Jerome Powell indicated the Fed would remain data-dependent and noted that upside risks to inflation and downside risks to employment had lessened.
Market participants continued to expect the first interest-rate reduction to occur in June, as reflected in futures pricing from CME’s FedWatch tool.
Political developments and other market movers
Efforts by U.S. political leaders to negotiate new restrictions on federal immigration agents advanced, with President Donald Trump and Senator Chuck Schumer moving to reach an agreement that could avert a potential government shutdown ahead of a funding deadline at Friday midnight, according to reporting in the press.
In commodity-related equities, rare-earth and critical-mineral producers fell after a report indicated the Administration would step back from maintaining price floors for critical minerals. USA Rare Earth declined 10%. MP Materials fell 5.7%. Critical Metals and United States Antimony each slid 8%.
Overall, markets absorbed a mix of strong capital spending plans from some tech leaders and rising investor scrutiny about the immediate profitability of those investments, while central bank policy and political negotiations added to near-term uncertainties.