The S&P 500 and the Nasdaq were poised for a strong start on Friday after upbeat forecasts from Apple and Amazon helped calm nerves, a day after the indexes suffered their sharpest drop in more than three weeks.

Amazon’s shares surged 12.9% in premarket trading, after the company forecast quarterly sales above estimates on the back of its cloud revenue rising at the fastest clip in nearly three years.

Apple rose 2.6% as its forecast for iPhone sales in the holiday quarter surpassed Wall Street expectations.

With all the “Magnificent Seven” megacaps except Nvidia having reported quarterly results, investors have had a fresh look at how aggressively Big Tech majors such as Microsoft and Meta are spending on artificial intelligence.

“The worry is not that these companies are spending huge amounts, but that we’re not seeing the payout in the earnings just yet, and that we may not see earnings catch up with the huge amount of spending,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

On Thursday, the S&P 500 and Nasdaq posted their steepest percentage declines since October 10, with the benchmark index closing at its lowest in more than a week.

Of the 278 S&P 500 companies that have reported third-quarter results so far, 83.1% have surpassed analysts’ estimates, according to LSEG data. That’s well above the historical average, where roughly 67% of firms beat forecasts.

At 08:23 a.m. ET, Dow E-minis were up 125 points, or 0.26%, S&P 500 E-minis were up 61.25 points, or 0.89%, and Nasdaq 100 E-minis were up 383.25 points, or 1.48%.

MONTHLY GAINS DESPITE TEMPERED FED OUTLOOK

The tech-heavy Nasdaq was on track for its seventh consecutive monthly advance, its longest streak since May 2017. The S&P 500 and blue-chip Dow were headed for their sixth.

While expectations for faster Federal Reserve rate cuts buoyed stocks earlier in the month, markets are still adjusting to a shift in policy outlook after the central bank delivered a widely expected quarter-point rate cut but signaled that another move in December was not a “foregone conclusion”.

The Fed’s cautious language prompted traders to scale back bets on a third cut this year, with futures now pricing in a 67.9% chance of a similar-sized move in December, down from nearly 90% earlier in the week.

In other premarket moves, Warner Bros Discovery shares rose 3% following a Reuters report that Netflix was actively exploring a bid for the company’s studio and streaming business.

Netflix added 1.7% as it unveiled plans for a 10-for-1 stock split.

Getty Images <GETY.N> leapt 51.5% after signing a global multi-year licensing agreement with Perplexity AI.

Western Digital jumped 11% on forecasting quarterly earnings above Wall Street estimates.

Strategy rose 6.5% after posting a profit in the third quarter, compared with a loss a year earlier.

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(Reporting by Pranav Kashyap and Nikhil Sharma in Bengaluru; Editing by Mrigank Dhaniwala, Krishna Chandra Eluri and Devika Syamnath)