Futures rise after Fed boosts rate cut hopes; Micron's rally lifts chipmakers

By Bansari Mayur Kamdar and Shashwat Chauhan

(Reuters) -Futures tracking Wall Street's main stock indexes gained on Thursday as chip stocks rose following Micron Technology's upbeat forecast, while investors took comfort in the Federal Reserve sticking to its three-rate-cut view for this year.

Wall Street rallied on Wednesday, with the S&P 500 notching a record high after U.S. central bankers kept borrowing costs unchanged and indicated they still expect to ease interest rates by three-quarters of a percentage point by the end of 2024.

"The Federal Open Market Committee (FOMC) meeting concluded on a more dovish tone than even the optimistic marketplace had anticipated," said Sam Stovall, chief investment strategist at CFRA.

"The Street went into this meeting expecting three cuts this year, with the first coming by mid-year, and that is what appears to have been communicated, as Chair Powell did not push back against market expectations for a rate cut in June."

Inflation reports "haven't really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road to 2%," Powell said in a press conference after the policy meeting.

The CME FedWatch tool showed the market is now pricing in a 70% chance of a Fed rate cut in June, compared with around 56% at the beginning of the week.

UBS Global Research said that it now expects the first cut in June, compared with its prior forecast of a cut in May.

Chipmaker Micron Technology jumped 17.7% in trading before the bell after posting a surprise quarterly profit and forecasting third-quarter revenue above estimates.

Peers such as Intel and Nvidia added more than 1% each, while Western Digital jumped 6.9%.

Separately, TD Cowen upgraded Broadcom's rating to "outperform". The stock was up 2.7%.

Investors awaited data on weekly jobless claims and business activity due later in the day.

At 7:00 a.m. ET, Dow e-minis were up 85 points, or 0.21%, S&P 500 e-minis were up 17 points, or 0.32%, and Nasdaq 100 e-minis were up 127.75 points, or 0.69%.

Most rate-sensitive megacap growth and technology stocks also advanced in premarket trading.

Apple, however, fell 1.2% on a report that the U.S. Department of Justice is preparing to sue the company as soon as Thursday for allegedly violating antitrust laws.

Reddit's shares are expected to start trading on the New York Stock Exchange later in the day under the ticker 'RDDT' after the social media platform priced its initial public offering at the top end of its targeted range of $31 to $34 per share.

(Reporting by Bansari Mayur Kamdar and Shashwat Chauhan in Bengaluru; Editing by Shounak Dasgupta and Maju Samuel)