Micron's Strong Earnings Boost Chip Stocks and AI Optimism, Pushing US Markets Near Record Highs

Micron's Earnings Fuel AI Optimism and Market Rally

U.S. stock index futures rose on Thursday, signaling that major indexes were approaching their record peaks. This upward trend was primarily driven by robust earnings from memory-chip maker Micron Technology, which fueled optimism around artificial intelligence (AI) 1

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. The benchmark S&P 500 and tech-led Nasdaq were nearly 1% below their all-time highs at Wednesday's close, supported by the de-escalation of hostilities in the Middle East .

Chip Stocks Surge on Micron's Performance

Micron Technology's shares rose 2.7% in premarket trading after the company forecast quarterly revenue above estimates, citing growing demand for its chips used in AI data centers 1

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. This positive outlook had a ripple effect across the semiconductor sector, with other chip manufacturers also seeing gains. Nvidia, which had already reached a fresh all-time high on Wednesday, advanced another 1.2% 3

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Economic Data and Federal Reserve Watch

Investors are closely monitoring several economic indicators scheduled for release. The Commerce Department's final take on first-quarter GDP, durable goods data for May, and initial jobless claims data are all in focus 4

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. These reports will provide crucial insights into the health of the U.S. economy and potentially influence future monetary policy decisions.

Federal Reserve Chair Jerome Powell's recent congressional testimony, where he reiterated a wait-and-watch approach on interest rate cuts, continues to shape market expectations. Traders are currently pricing in about 63 basis points of rate cuts by the end of 2025, with a 70% chance of a 25-basis-point rate cut in September, according to CME Group's FedWatch tool 2

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Political Developments and Central Bank Independence

Reports suggest that President Donald Trump could potentially announce a Fed Chair successor as early as September or October, in what some view as an attempt to undermine Powell 1

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. This move has raised concerns about the central bank's independence, particularly at a time when policymakers are striving to balance the risks of slowing growth and higher inflation 2

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Looking Ahead

As the market approaches record levels, investors are keeping a close eye on upcoming events and data releases. The Personal Consumption Expenditures (PCE) report, the Fed's preferred gauge of inflation, is due on Friday and will be scrutinized for any signs of tariff-induced price changes in the U.S. economy 4

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Several central bank officials are scheduled to speak later in the day, including Fed Chicago President Austan Goolsbee, Fed Richmond President Thomas Barkin, and Fed Minneapolis President Neel Kashkari 2

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. Their comments may provide additional insights into the Fed's thinking on monetary policy and economic outlook.

In the corporate world, sportswear giant Nike is set to release its quarterly results before the opening bell, adding another dimension to the day's market-moving events 1

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