Jan 18 (Reuters) - The benchmark S&P 500 and the Nasdaq were set to open higher on Thursday, buoyed by chip and megacap stocks, while investors watched out for clues on the timing of the Fed's rate cuts and the economic outlook, as more earnings roll in.
U.S.-listed shares of Taiwan Semiconductor Manufacturing (TSMC) jumped 7.7% in premarket trading, after the world's largest contract semiconductor maker projected a more-than 20% growth in 2024 revenue, on booming demand for high-end chips used in artificial intelligence applications.
Nvidia (NVDA.O), opens new tab, Microchip Technology (MCHP.O), opens new tab, Marvell Technology (MRVL.O), opens new tab and Advanced Micro Devices (AMD.O), opens new tab rose between 2.3% and 3.4%.
Megacap stocks such as Microsoft (MSFT.O), opens new tab, Tesla (TSLA.O), opens new tab and Meta Platforms (META.O), opens new tab also gained between 0.4% and 1.0%, as U.S. Treasury yields ticked lower.
Apple (AAPL.O), opens new tab climbed 2.0%, after BofA Global Research upgraded the iPhone-maker's stock to "buy" from "neutral", marking its first rating upgrade this year.
On the economic data front, initial claims for state unemployment benefits dropped 16,000, to a seasonally adjusted 187,000 for the week ended Jan. 13 - the lowest level since September 2022.
"The market is still strong, employers are still hesitant to lay folks off; it's indicative of an economy that is still growing," said Robert Pavlik, senior portfolio manager at Dakota Wealth.
Separately, housing starts numbers fell to 1.46 million units, versus expectations of a drop to 1.426 million units.
The U.S. Federal Reserve is walking a tightrope to bring inflation under control without causing a growth slowdown, as the central bank's "Beige Book" report, a snapshot of the economy's health, showed economic activity saw little or no change from December through early January.
Money market participants now see a near-60% chance for a 25-basis-point rate cut in March, lower from an over-80% probability a month ago, according to the CME Group's FedWatch Tool.
Investors will also parse comments by Atlanta Fed President Raphael Bostic, a voting member this year, for cues on the timing of rate cuts.
At 8:43 a.m. ET, Dow e-minis were down 83 points, or 0.22%, S&P 500 e-minis were up 15 points, or 0.31%, and Nasdaq 100 e-minis were up 119.5 points, or 0.71%.
Humana (HUM.N), opens new tab slid 14.5%, as the health insurer forecast fourth-quarter medical costs to be higher than previously expected. Peer UnitedHealth (UNH.N), opens new tab, a Dow component, also lost 2.6%.
KeyCorp(KEY.N), opens new tab shed 2.8%, after the lender posted a drop in its fourth-quarter profit, while Birkenstock(BIRK.N), opens new tab sank 13.5% after it missed quarterly profit expectations in its first result since going public.
"Earnings have been a little bit below average, although it's still early, so the grade can change," Pavlik said.
Spirit Airlines (SAVE.N), opens new tab fell 4.6%, after Citigroup downgraded the stock to "sell" from "neutral". The company's shares have already lost nearly 60% in two sessions after a judge blocked the carrier's planned merger with rival JetBlue Airways (JBLU.O), opens new tab.
Boeing (BA.N), opens new tab gained 0.8% after India's Akasa Air said it had ordered 150 of the planemaker's 737 MAX narrowbody aircraft.
Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Pooja Desai and Shounak Dasgupta
