Fed rate pause expectations and AI tech rally lift Dow Jones futures

• An 85% probability of rates remaining unchanged underpins gains in US index futures, although Chair Warsh provides no clear policy signal.
• Market sentiment and the technology outlook improve as Super Micro, Dell, and HPE post substantial pre-market advances.
• Robust Q3 revenue and talks over a Tesla merger drove SpaceX higher, whereas weaker growth weighs on Netflix.

A 0.25% advance takes S&P 500 futures to around 7,770 during Wednesday’s European session. Nasdaq 100 futures climb 0.71% to near 29,880, while Dow Jones futures remain little changed at about 52,730.

An 85% probability of the Federal Reserve leaving interest rates unchanged next week, according to the CME FedWatch Tool, formed the backdrop to gains in US stock futures as investors assessed the rate outlook. Maintaining a neutral position, Fed Chair Kevin Warsh stressed that he does not "prejudge" interest rate decisions. Markets therefore remain without a clear indication of whether the central bank will increase rates or leave them unchanged at its forthcoming October policy meeting.

Strong company earnings, chiefly from artificial intelligence-related equities, helped sentiment improve despite uncertainty over monetary policy. After releasing robust preliminary results, Super Micro Computer climbed over 13% in pre-market dealings. Its gains revived confidence in AI expenditure and supported shares across the sector. Dell Technologies and Hewlett Packard Enterprise, both hardware manufacturers, moved higher, as did neocloud providers CoreWeave and Nebius Group.

Third-quarter revenue of $14.58 billion, a substantial 161% increase year on year, helped SpaceX shares rise 8%. Further support came from Elon Musk’s disclosure that special committees have been established at SpaceX and Tesla to examine a possible merger. By contrast, Netflix lost over 5% after the streaming group recorded its weakest revenue growth in three years and forecast a fourth successive quarter of slowing growth.

In their assessment of “another 24 hours of uncertainty and volatility,” Deutsche Bank analysts say trading began with “a widespread morning sell-off dominated by AI concerns, higher oil prices and ongoing worries over French sovereign debt.” The mood subsequently improved as “the US came in,” they observe. The session then “turned into a more positive” one, eventually taking “the S&P 500 to close +0.28% higher as the index saw the most daily advancers since April.”