New York, NY – US equity futures showed a positive trend following impressive earnings reports from tech giants Microsoft Corp. and Alphabet Inc. These results indicated that the artificial intelligence sector, which has been driving gains for technology stocks, is still on a promising trajectory.

Alphabet’s stock surged up to 12% in premarket trading, potentially boosting its market capitalization by over $230 billion and pushing its valuation beyond $2 trillion. Likewise, Microsoft saw a 4% increase in its stock price. The companies surpassed Wall Street expectations for the latest quarter, largely driven by the demand for AI services.

Investors, who had been concerned about high valuations in the tech industry, found reassurance in the strong earnings. The market had previously been unsettled by reports of a significant slowdown in the US economy and persistent inflation trends that led to higher Treasury yields. However, the outstanding performance of these tech megacaps raises questions about whether they can sustain a broader market rally.

While earnings continue to take center stage, the focus on Friday also includes US data, with particular interest in the Federal Reserve’s preferred measure of inflation. After economic data pushed back expectations for policy easing, Treasury yields saw a slight dip from previous bond market losses. The dollar remained steady amid these developments.

Justin Onuekwusi, the chief investment officer at St James Place Management, noted that the market is heavily influenced by the earnings of a few major companies, driving overall sentiment. Concerns around earnings and rate decreases being priced out have contributed to recent volatility, a trend that is likely to persist.

According to strategists at JPMorgan Chase & Co., nearly 80% of S&P 500 companies that have reported their earnings so far have exceeded analyst estimates. However, the stock price reactions have been somewhat subdued, with better-than-expected results yielding below-average gains while results falling short of estimates leading to higher-than-usual penalties. Over half of the S&P 500 companies are yet to report their earnings.

In other news, Exxon Mobil Corp. experienced a 2.8% decline after missing EPS estimates, while Intel Corp. saw a more significant drop of over 7% due to weaker-than-anticipated guidance. The market also witnessed a noteworthy decline in the value of the yen against the dollar, prompting traders to monitor Japan for potential intervention. The yen’s volatility arose following the Bank of Japan’s decision to maintain unchanged monetary policy.