By Shristi Achar A and Shashwat Chauhan
(Reuters) – U.S. stock index futures advanced on Friday as megacap growth shares rebounded on the back of robust quarterly results from Alphabet and Microsoft, while investors awaited a key inflation print that could help shape U.S. monetary policy.
Alphabet jumped 12.1% in premarket trading after the Google-parent announced its first-ever dividend, a $70 billion stock buyback and beat estimates for first-quarter results.
The share surge could lead to the search giant’s market value topping $2 trillion, if premarket gains hold.
Lifting sentiment further, Microsoft gained 4.4% on beating Wall Street estimates for third-quarter revenue and profit, driven by gains from AI adoption across its cloud services.
“After Meta’s miss, this was exactly what the markets needed,” Johan Javeus, senior economist at SEB, said in a note.
“Many investors who had been impatiently waiting for AI investments to also bring in higher revenues probably drew a sigh of relief when Alphabet’s CFO Ruth Porat said that ‘we saw an increasing contribution from our AI solutions’.”
Other growth stocks also rose on the results, with Amazon.com and Nvidia up 3.2% and 1.6%, respectively. Meta Platforms added 1.4%, after its near 11% drop in the previous session, which was its steepest fall in 18 months.
On the flip side, Exxon Mobil lost 0.7% after the largest U.S. oil company missed analysts’ estimates with a 28% year-on-year drop in first-quarter profit.
The upbeat earnings across several sectors this week have propped up Wall Street’s main stock indexes for weekly gains, with the benchmark S&P 500 looking to snap three weeks of losses while the Nasdaq is set to end four straight weeks of declines.
Focus now shifts to the Personal Consumption Expenditures (PCE) index reading for March, the Federal Reserve’s preferred inflation gauge, due at 8:30 a.m. ET, to further ascertain the state of inflation and the timing of interest rate cuts.
The index is estimated to show a 2.6% rise in March on a year-on-year basis, as per economists polled by Reuters, compared with a 2.5% rise in February.
Money markets are pricing in just about 35 basis points (bps) of rate cuts from the central bank this year, down from nearly 150 bps seen at the beginning of the year, as per LSEG data.
At 7:12 a.m. ET, Dow e-minis were up 52 points, or 0.14%, S&P 500 e-minis were up 39.75 points, or 0.78%, and Nasdaq 100 e-minis were up 184 points, or 1.05%.
Among other stocks, Snap surged 24.6% premarket after the social media firm beat first-quarter estimates for quarterly revenue and user growth. Shares of Pinterest also rose 4.8%.
Intel dropped 8.2% on forecasting second-quarter revenue and profit below estimates as it faces weak demand for its traditional data center and PC chips and trails in the surging market for AI components.
(Reporting by Shristi Achar A and Shashwat Chauhan in Bengaluru; Editing by Maju Samuel)