Wall Street Rally Boosts Tech Stocks Amid Fed Speculations

U.S. stock index futures rose on Tuesday, led by semiconductor and megacap technology stocks continuing Monday's rally. Investors are keenly awaiting Federal Reserve chair Jerome Powell's comments on monetary policy. The market's optimism is bolstered by gains in AI-linked shares, and premarket trading reflects positive sentiment.

U.S. stock index futures rose on Tuesday, with semiconductor and megacap technology stocks set to prolong Monday's rally as investors awaited comments from Federal Reserve chair Jerome Powell for clues on the central bank's monetary policy path.

The S&P 500 and the Nasdaq inched upwards to close at record highs on Monday, buoyed by a rally in chip stocks. The Philadelphia semiconductor index rose to a more than two-week high, marking the 35th fresh closing record this year for the benchmark index. Gains in AI-linked and other tech shares have kept equity sentiment bright, despite uncertainty around the Fed's rate-cut plans.

Intel shares leapt 3.2% in premarket trading after jumping over 6% on Monday, while AI-chip favorites Nvidia and Marvell Technology gained over 1% each. Investors will closely scrutinize Powell's Congressional testimony later in the day to gauge the central bank's assessment of recent economic data, which points to a labor market slowdown amidst other signs of economic weakness. The testimony, along with a Q&A session, is scheduled to start at 10 a.m. ET.

Analysts at Unicredit noted in a report, "We expect Mr. Powell's comments in the Q&A to be either balanced or slightly dovish, given the resumption in progress on disinflation and signs that economic activity and employment are slowing, albeit gradually." Policymakers' projections currently show just one rate cut this year, but markets are pricing in 50 basis points of easing, with a nearly 74% chance for a 25 bps cut at the Fed's September meeting, according to CME's FedWatch.

Rate-sensitive megacap stocks Microsoft, Amazon.com, Alphabet, and Meta Platforms were up between 0.3% and 0.5%. WisdomTree senior economist Jeremy Siegel commented, "The market is continuing on a bull run and, with the prospects of rate cuts, I believe it may continue for a while." Crucial inflation data is also due this week, with the consumer price index scheduled for Thursday and the producer price index numbers expected on Friday.

Investors are also anticipating the start of the second-quarter corporate earnings season this week, with big banks reporting on Friday. According to LSEG I/B/E/S data, analysts, on average, expect S&P 500 companies to increase their aggregate earnings per share by 10.1% in the second quarter, up from an 8.2% increase in the first quarter.

At 7:12 a.m. ET, Dow e-minis were up 30 points, or 0.08%, S&P 500 e-minis were up 12.5 points, or 0.22%, and Nasdaq 100 e-minis were up 77.25 points, or 0.37%. Among individual movers, Tempus AI jumped 5.2% after multiple brokerages, including J.P.Morgan and Morgan Stanley, initiated coverage of the stock with bullish ratings.

Eli Lilly gained 0.4% after a data analysis report released on Monday showed its treatment Mounjaro leads to faster and greater weight loss compared to Novo Nordisk's obesity drug, Wegovy.