Microsoft gains after new share buyback plan, dividend hike

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Intel jumps following collaboration with Amazon's AWS

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Retail sales rise 0.10% in August

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Futures up: Dow 0.30%, S&P 500 0.40%, Nasdaq 0.65%

(Updated at 08:41 a.m. ET/1241 GMT)

By Johann M Cherian and Purvi Agarwal

Sept 17 (Reuters) - Wall Street's main indexes were set to open higher ahead of the Federal Reserve's monetary policy meeting, which starts on Tuesday, after data signaling a healthy consumer allayed worries of a sharp slowdown in the U.S. economy.

A Commerce Department report showed retail sales rose 0.10% in August compared to an estimate of a 0.20% decrease, according to economists polled by Reuters, and a 1.1% increase in the previous month.

Rate-sensitive growth stocks such as Alphabet and Tesla added 0.78% and 0.83%, respectively, in premarket trading, while Nvidia rose 1.30%.

The yield on two-year Treasury bonds hovered near levels last seen more than a year ago.

Microsoft also rose 2.0% on the day after the AI-frontrunner's board approved a new $60-billion share buyback program and hiked its quarterly dividend by 10%.

At 08:41 a.m. ET, Dow E-minis were up 125 points, or 0.30%, S&P 500 E-minis were up 22.75 points, or 0.40%, and Nasdaq 100 E-minis were up 127.25 points, or 0.65%.

Fed officials are scheduled to start their two-day meeting and traders are betting on a 67% probability that the world's most influential central bank will decide to lower borrowing costs by a bigger 50 basis points, according to the CME Group's FedWatch Tool.

Odds favoring a smaller 25 bps reduction stand at 33% from 66% a week earlier, as investors focused on remarks from a former policymaker supporting an outsized move and signs of a cooling labor market, among other indicators.

"Retail sales being higher is suggestive that the economy is modestly better," said Michael Green, chief strategist and portfolio manager at Simplify Asset Management.

"I would say that the actual underlying data is relatively mixed and markets are in a bit of a holding pattern, waiting for (Chair Jerome) Powell and the Federal Reserve tomorrow."

The Dow closed at a record high and the S&P 500 ended its sixth straight session higher and near a record high in the previous session, helped by gains in Financials and Energy stocks.

However, the Nasdaq ended the session lower as investors rotated away from tech stocks, which have spearheaded much of this year's rally.

September has historically been weak 100% Verified Access for Cloud Services - loadingvcc.com U.S. equities, with the benchmark S&P 500 down about 1.20% for the month on an average since 1928. The index has lost about 0.30% so far this September.

Still, a survey of BofA fund managers showed global investor sentiment improved in September 2024 for the first time since June, on optimism around a soft landing and rate cuts by the U.S. central bank.

Among other movers, Intel jumped 6.7% after signing Amazon.com's cloud services unit as a customer to make custom artificial-intelligence chips.

Viasat dropped 2.4% after brokerage J.P.Morgan downgraded it to "neutral" from "overweight". Hewlett Packard Enterprise gained 3.8% after BofA Global Research upgraded the server maker to "buy" from "neutral".

SolarEdge fell 5.2% after Jefferies

downgraded

the solar inverter maker to "underperform" from "hold" and slashed its price target to the lowest on Wall Street. (Reporting by Johann M Cherian in Bengaluru; Editing by Pooja Desai)