Investing.com — U.S. stock index futures edged higher in late trading Sunday after strong trading on Wall Street as strong results from Alphabet and Microsoft sparked gains in tech stocks.
However, enthusiasm among sectors outside of tech was much lower, especially amid mounting evidence that inflation is not easing as much as initially expected. In this scenario, the Federal Reserve is likely to keep interest rates high for an extended period of time.
The central bank is scheduled to meet later this week.
By 19:09 ET (23:09 GMT), it rose 0.1% to 5,1137.75 points and rose 0.1% to 17,862.25 points. It rose by 0.1% to 38,489.0 points.
Alphabet and Microsoft fuel bumper technology advances
Tech giants Alphabet (NASDAQ:) and Microsoft Corporation (NASDAQ:) posted strong first-quarter profits, raising hopes that demand for artificial intelligence will keep profits and valuations positive in coming months. That triggered a rally in tech stocks overall.
Both stocks rose on Friday, with Alphabet soaring more than 10% after announcing its first dividend. Analysts say the company is best positioned among its peers to benefit from the AI boom, and the stock has hit a record high.
Gains in tech stocks hit their peers more than their peers on Friday, closing 2% lower at 15,927.90 points. It also rose 1% to 5,099.96 points. However, it was much more subdued, rising 0.4% to 38,239.66 points.
Earnings season is set to continue this week, with more Wall Street giants expected to make announcements in the coming days. After a relatively quiet day on Monday, Amazon.com Inc. (NASDAQ:) coca cola company (NYSE:), Advanced Micro Devices, Inc. (NASDAQ:), and Eli Lilly and Company (NYSE:) will report earnings on Tuesday.
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Fed meeting in focus as interest rate cut expectations fade
Most non-tech equity sectors had a much more subdued performance on Friday, especially as the Fed's recommended inflation measure for March was higher than expected.
That reading raised concerns that there was little confidence the Fed would start cutting rates and that it was likely to keep rates high for an extended period of time.
That puts the focus on further cues from the central bank on the policy, expected later this week. The Fed is widely expected to keep interest rates on hold in May.
There is also growing speculation that the Fed may not start cutting rates until September or the fourth quarter, given weaker inflation and the resilience of U.S. consumer spending.
