Investing.com — U.S. stock index futures were flat in afternoon trade Tuesday after an artificial intelligence-fueled rally put Wall Street at new highs, with focus turning to the Federal Reserve and upcoming inflation data.
The hype around AI remained a major support point for the markets after Apple Inc (NASDAQ:) announced a partnership with OpenAI, the maker of ChatGPT, to roll out AI features. This optimism also extended to aftermarket trading after Oracle Corporation (NYSE:) announced partnerships with Microsoft Corporation (NASDAQ:), OpenAI, and Alphabet Inc's Class A (NASDAQ:) Google for more cloud capacity to power intelligence Artificial.
However, broader gains were held back by expectations of more signals on US interest rates later on Wednesday.
It rose 0.1% to 5,386.50 points, while it rose 0.1% to 19,265.75 points. It settled at 38788.0 points by 19:14 ET (23:14 GMT).
Fed meeting and CPI data scheduled for Wednesday
The market's focus was squarely on the conclusion of the Federal Reserve's two-day meeting on Wednesday, where the central bank is widely expected to hold its meeting.
But markets were somewhat optimistic about the Fed's potential rate cut, especially after its peers, particularly the Fed, began cutting rates earlier in June.
However, the general consensus is that the Fed will spring into action, as the US labor market remains strong and inflation expectations are buoyant.
Ahead of the interest rate decision, May data is expected to provide further signals on inflation.
The reading is also scheduled to be released on Wednesday, and is expected to show that inflation remained steady in May, and well above the Federal Reserve's annual target range of 2%.
Steady inflation reduces the chances of the Fed cutting interest rates, while the possibility of US interest rates rising for a longer period represents a restrictive outlook for equity markets.
The S&P 500 and Nasdaq are at record highs amid AI hype
The stock index and index ended at record levels on Tuesday, driven mainly by technology stocks amid the ongoing hype around artificial intelligence. Apple shares rose more than 7% to a record level after announcing new artificial intelligence features, while Microsoft and Alphabet added about 1% each.
The S&P 500 rose 0.3% to close at 5,375.32 points on Tuesday, while the Nasdaq Composite rose 0.9% to 17,343.84 points. But the most economically sensitive index continued to lag behind its peers, falling 0.3 percent to 38,747.42 points.
Gains in most technology stocks did not spill over into aftermarket trading.
But Oracle rose nearly 9% after the bell on its new AI partnerships, which largely overshadowed the company's disappointing quarterly earnings.
