Investing.com — U.S. stock index futures steadied in evening trading Tuesday after an AI-fueled rally drove Wall Street to new highs, with attention shifting to the Federal Reserve and upcoming inflation data.
The hype around AI continued to be a key support point for the market after Apple Inc (NASDAQ:) announced it was partnering with ChatGPT maker OpenAI to roll out AI capabilities. This optimism also spilled over into aftermarket trading after Oracle Corp (NYSE:) announced it was partnering with Microsoft Corp (NASDAQ:), OpenAI and Alphabet Inc Class A (NASDAQ:) Google to expand its AI-powered cloud capacity.
Still, broad gains were kept in check by expectations of further indications on U.S. interest rates later on Wednesday.
It rose 0.1% to 5,386.50 points and 0.1% to 19,265.75 points before stabilizing at 38,788.0 points as of 19:14 ET (23:14 GMT).
Fed meeting, CPI data due Wednesday
Market attention is now turning to the conclusion of the two-day Federal Reserve meeting on Wednesday, where the central bank is widely expected to raise interest rates.
But markets were somewhat optimistic about the Fed hinting at a possible rate cut, especially after its peers, particularly the central bank, began cutting rates in early June.
Still, the general consensus is that the Fed will begin raising interest rates as the U.S. labor market remains strong and inflation expectations remain high.
May's data is expected to provide further clues on inflation ahead of the interest rate decision.
That release, also due on Wednesday, is expected to show inflation remained strong in May, staying well above the Fed's 2% target range for the year.
High inflation reduces the likelihood of the Fed cutting interest rates, while the prospect of US interest rates remaining high for a long period of time constrains the outlook for the stock market.
S&P 500, Nasdaq hit all-time highs on AI boom
Stocks closed at record highs on Tuesday as the AI frenzy continued, driven mainly by technology stocks. Apple rose more than 7% to a record high after unveiling new AI features, while Microsoft and Alphabet rose about 1% each.
The S&P 500 closed up 0.3% to 5,375.32 points on Tuesday, while the Nasdaq Composite Index rose 0.9% to 17,343.84 points. However, the economically sensitive Nasdaq Composite continued to lag its peers, losing 0.3% to 38,747.42 points.
The gains for most tech stocks did not spill over into after-hours trading.
But Oracle's new AI partnership helped it surge nearly 9% after the close, almost overshadowing the company's disappointing quarterly results.
