S&P 500 and Nasdaq futures rise as China stimulus and chip stocks lift sentiment

U.S. stock futures jumped on Thursday, setting the stage for new record highs. Investors welcomed a series of news including solid U.S. economic data, upbeat results from Micron (MU) and China's promise of more stimulus while awaiting word from Jerome Powell.

Futures for the Dow Jones Industrial Average (YM=F) rose 0.5%, while futures for the S&P 500 (ES=F) gained 0.8% after both indexes fell from all-time highs by the close. Contracts for the tech-heavy Nasdaq 100 (NQ=F) led the advance, rising 1.5% as Micron shares surged.

Thanks to a double dose of optimism about AI trading, the health of the US economy, and China's stimulus initiative that could impact US markets, stock prices are looking solidly positive again.

Nvidia supplier Micron has raised its revenue forecast for the next quarter, citing strong demand for its memory chips used in AI data centers. Chip stocks Nvidia (NVDA), AMD (AMD), ASML (ASML) and STMicro (STM) rose following the release of the earnings report.

In addition, a final report from the US government on second-quarter GDP growth exceeded Wall Street expectations, while weekly unemployment figures unexpectedly fell to their lowest level in four months.

Meanwhile, China's top leaders have signaled they are pulling out all the stops to revive the ailing economy, making new promises to increase government spending, end the housing crisis and support the stock market. A big rise in mainland stocks has put the CSI 300 (000300.SS) on track for its best week in a decade.

Growing expectations of another massive interest rate cut by the US Federal Reserve also contributed to the positive mood. Traders are assuming a 60 percent probability that interest rates will be cut by 0.5 percent at the November meeting. A week ago, the figure was 40 percent.

Read more: What the Fed's interest rate cut means for bank accounts, CDs, loans and credit cards

Investors are awaiting Fed Chairman Powell's statement that will put those hopes to the test later today. It will be the culmination of a series of Fed speakers on Thursday. Their comments will form the basis for Friday's highly anticipated reading of the PCE index, the Fed's preferred inflation indicator.