1. Futures rise

U.S. stock futures ripped higher on Thursday, fueled in part by blockbuster tech earnings that helped temper indications from the Federal Reserve that a September interest rate reduction may not be coming.

By 03:43 ET (07:43 GMT), the Dow futures contract had jumped by 171 points, or 0.4%, S&P 500 futures had gained 64 points, or 1.0%, and Nasdaq 100 futures surged by 330 points, or 1.4%.

The main averages on Wall Street were mixed at the end of trading on Thursday, as investors assessed the Fed’s decision to leave rates unchanged after its latest gathering and commentary around future policy actions (more below).

Sentiment had been bolstered prior to the Fed’s announcement by a stronger-than-anticipated reading of second-quarter U.S. economic activity, thanks largely to a slide in imports. However, final sales to private domestic purchasers, a metric which economists and policymakers alike view as a gauge of underlying economic growth, rose by 1.2% -- the slowest uptick in domestic demand since the fourth quarter of 2022.

Still, a separate measure of private payrolls came in ahead of expectations, suggesting some resilience in the jobs market. More labor data is due out this week, including the all-important nonfarm payrolls report for July on Friday.

Solid returns from a selection of consumer-facing companies also helped to underline the relative strength of the American consumer.

2. U.S.-South Korea trade deal

The U.S. and South Korea have agreed to a trade deal that will see Washington slap a 15% tariff on imports from the country, lower than a previously-threatened rate of 25%, according to President Trump.

It is the latest in a string of trade pacts issued by the White House in recent days and comes shortly before a self-imposed August 1 deadline for the implementation of heightened "reciprocal" levies.

Trump made the announcement following a meeting with officials from South Korea, a major trading partner with the U.S. that exports key goods like semiconductor technology and cars.

Seoul also pledged to invest $350 billion in specific U.S. projects selected by Trump and purchase another $100 billion in energy items, Trump said, echoing a prior pact made with the European Union last weekend.

Yet, as it has been with many recent trade agreements, many of the details of the deal with South Korea remain unclear -- specifically the structure of Seoul’s financing, when the funds would be delivered and how much of the terms are binding in nature.

In a note, analysts at Capital Economics added that there are also questions around the treatment of electronics and pharmaceuticals exports from South Korea once sector-specific tariffs are unveiled.

3. Fed decision

The Fed kept its key policy rate steady at a range of 4.25% to 4.5%, in line with widely-held expectations, with the central bank citing a "low" unemployment rate, "solid" labor market conditions and "somewhat elevated" inflation.

Wednesday’s decision came as Fed Chair Jerome Powell has been facing intensifying pressure from Trump to sharply and quickly ratchet down borrowing costs to help boost economic activity.

Even with Trump frequently criticising his leadership and hinting at dismissing him before the end of his tenure next year, Powell has been broadly consistent in his backing of a more cautious, wait-and-see approach to policy actions, due partly to uncertainty around the murky implications of Trump’s aggressive tariff actions.

Powell did not seem to stray too far from this stance in his latest comments, noting that it was too soon to say if the Fed will cut rates at its next gathering in September. He added that policy is modestly restrictive and not reining in the wider economy.

Yet there was dissent within Fed rate-setters to Powell, with Governors Christopher Waller and Michelle Bowman -- both Trump appointees -- voting for a 25-basis point rate reduction this month. The officials pointed to worries over a slowing labor market as evidence for a cut.

Outside of the U.S., the Fed was not alone in its decision to leave rates unchanged in recent hours. The Bank of Canada stood pat on its policy rate on Wednesday, as did the Bank of Japan on Thursday.

4. Meta reports

Shares in Meta Platforms soared in extended hours trading after strength in the Facebook-owner’s crucial advertising business powered better-than-anticipated sales in the April-to-June period and raised hopes that the company’s artificial intelligence investments are beginning to bear fruit.

Sales jumped by 22% during the second quarter to $47.5 billion, while net income came in at $18.3 billion, both topping Wall Street projections. Analysts at Vital Knowledge said Meta’s top-line results were underpinned by an 11% uptick in ad impressions as well as a 9% increase in ad pricing.

For the current quarter, Meta anticipates that revenue will rise by 17% to 24% versus a year earlier, although it flagged that a difficult annual comparison could lead to slower sales growth in the fourth quarter.

Meta, who, like many of its Big Tech peers, has laid out plans to spend heavily on AI, kept its capital expenditures outlook largely unchanged at $66 billion to $72 billion, compared with $64 billion to $72 billion previously, and implied that 2026 capex will be around $100 billion. Analysts have estimated next year’s figure will stand at $80 billion.

A spike in depreciation and higher compensation could also contribute to "meaningful upward pressure" on 2026 operating expenses, Meta executives warned.

"Bottom line: the Meta report is extremely robust, and the only negative takeaway is the warning management issues about 2026 costs," the Vital Knowledge analysts said.

5. Microsoft earnings

AI played a major role in results from Microsoft as well, with the nascent technology supercharging performance at the software giant’s cloud computing division.

Fiscal fourth-quarter revenue at the unit, known as Azure, jumped by 39%, outpacing expectations and fueling group-wide sales of $76.4 billion.

On a net basis, profit came in at $27.2 billion, or $3.65 per diluted share -- also surpassing estimates.

Executives indicated that Microsoft expects to continue to shell out more and more cash on AI, as it looks to rapidly build up the data centers that undergird these models. CFO Amy Hood said Microsoft is forecasting capital spending of over $30 billion in its first quarter -- after having registered a 27% year-over-year rise in capex to $24.2 billion in the prior period.

Shares in Microsoft, which have already surged by more than 22% so far this year, were higher by over 8% in after-hours dealmaking.

Meta and Microsoft were the latest members of the so-called "Magnificent Seven" group of mega-cap tech stocks to report their quarterly earnings. Further results are due out after the closing bell on Thursday from iPhone-maker Apple (NASDAQ:AAPL) and e-commerce titan Amazon (NASDAQ:AMZN)