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By Sruthi Shankar and Ragini MathurBengaluru — US stock index futures rose on Thursday after a sharp selloff driven by uncertainty regarding the Federal Reserve’s policy outlook, while Microsoft’s forecast-beating results soothed investor concerns about companies’ huge AI spending.Microsoft rose 9% in premarket trading after the company forecast current-quarter sales and cloud growth that beat expectations. It also gave a capital expenditure outlook below Wall Street estimates and said it expects to keep generating cash through its just-started fiscal 2027.Investors have been spooked by rising AI costs at big technology firms even as they report strong earnings. Negative cash-flow reports from Alphabet and Tesla last week sparked a bout of selling in AI-linked stocks. Chip stocks also came under pressure as investors questioned high valuations, and by Wednesday the tech-heavy Nasdaq had dropped 10% from its peak in early June.AI concernsIn a sign that AI concerns were far from over, Meta Platforms dropped 8.5% after the social media giant reported a 91% drop in second-quarter free cash flow, underscoring the financial strain of its costly AI buildout.Apple and Amazon are scheduled to report earnings after markets close on Thursday. Read: DAVID TUDOR | SA can do much more than merely take a seat at the AI tableUS stocks fell sharply on Wednesday, with the benchmark S&P 500 recording its biggest percentage drop since June 10 after the Fed left interest rates unchanged in the 3.50%-3.75% range, but mixed messages from new Fed Chair Kevin Warsh left traders confused about the path of borrowing costs.“Despite the divided vote [by the federal open market committee], there was nothing really in Warsh’s remarks that made it clear that a September hike was in the offing,” said Matthew Ryan, head of market strategy at Ebury.On edgeBond markets were on edge, with the yield on 30-year Treasuries surging to the highest level in 19 years as investors grew increasingly concerned about the Fed’s monetary policy outlook and sought greater protection against future inflation.Based on CME Group’s FedWatch tool, traders currently see a 63% chance that the US central bank will raise interest rates by 25 basis points at its September meeting.Economic data, including the preliminary reading of second-quarter GDP, personal consumption expenditures for June and weekly initial jobless claims, was due later on Thursday.ET, Dow E-minis were up 0.4% in premarket trading and S&P 500 E-minis were 0.62% firmer. Nasdaq 100 E-minis were up 1.34%.Among other stocks, Qualcomm fell 4.2%, as the chipmaker forecast fourth-quarter profit below estimates and said revenue from Apple products would decline faster than expected.Cybersecurity firm Fortinet gained 11.3% after lifting its annual revenue forecast, signalling strong enterprise spending on its services amid rising data security incidents.Starbucks climbed 6.5% after the world’s largest coffee chain raised its annual sales and profit forecasts.Nearly half of S&P 500 companies have reported second-quarter results so far. Of those, 85.2% have topped analysts’ profit estimates, according to data compiled by LSEG IBES
