US pre-open: Stocks to rise as Apple, AMD surge on results

US stocks looked set to rise at the open on Wednesday following well-received quarterly numbers from tech giant Apple and chipmaker AMD, as investors eyed the latest policy announcement from the Fed and Sino-US trade talks.

At 1220 GMT, Dow Jones Industrial Average and S&P 500 futures were up 0.4% and Nasdaq futures were 0.9% firmer.

Oanda analyst Craig Erlam said: "Deteriorating Sino-US trade relations and an overly keen Federal Reserve were two of the most prominent causes of the sell-off in the final quarter of last year so it’s no surprise that so much attention will be on these events today. Markets have bounced back from the fourth quarter plunge but they’re still yet to fully recover and so confidence remains very sensitive to developments in both areas.

"Trade talks appeared to be moving along smoothly until last week, after which rumours of a cancelled meeting, reports of a deal being 'miles and miles' away and the US decision to charge Huawei have given a different impression. There will be hopes on both sides that any differences that have arisen can be ironed out during this visit, with the 90 day deadline now being a little over a month away."

Two days of talks between US and Chinese delegates are due to kick off in Washington later in the day, while the Fed's rate announcement is scheduled for 1900 GMT. With the US central bank widely expected to keep rates unchanged, attention will turn to Chair Jerome Powell's press conference.

"The market is expecting a more cautious Fed with the possibility of a rate hike in the near term being ruled out," said London Capital Group analyst Jasper Lawler. "As the US data starts to feed through following the US government shutdown, it points to slower growth. Not the environment for further hikes."

In corporate news, Apple shares were up 5.5% in pre-market trade following its results late on Tuesday.

David Cheetham, chief market analyst at XTB said the positive reaction in the stock was more down to the fact that expectations were low going into the event than a stellar report.

"Apple actually posted their first holiday-quarter decline in sales since 2001 but investors have seemingly looked through this to focus on slight beats on the expected earnings and revenues numbers and jumped in.

"Fears surrounding peak iPhone remain, with revenue from the handset tumbling by 15%, but CEO Tim Cook focused on a growing services business and rising sales of other devices to paint a more rosy picture. Mac revenue grew by 9%, while iPad sales climbed 17% as the smaller Wearables business, which includes the Apple Watch and AirPods, jumped by 50%.

"The stock is called to open around the 163 mark, which would be its highest level of the year and around the 23.6% fib retracement of the larger decline from its all-time peak last October at 233."

Advanced Micro Devices looked set for impressive gains at the open after the chipmaker said it swung to a profit in Q4 and issued an upbeat outlook for full-year revenue.

Elsewhere, eBay shares could be active after the online marketplace retailer said it would pay its first quarterly dividend and delivered record fourth-quarter earnings.

AT&T was weaker ahead of the bell as it undershot fourth-quarter phone subscriber estimates, while Tupperware fell 5.6% following the release of its fourth-quarter numbers.

Earnings are still due from McDonald's, while numbers from Microsoft, Qualcomm, Tesla and Visa Inc are on tap after the close.

On the data front, the ADP employment report is at 1315 GMT and pending home sales are at 1500 GMT.