Tech earnings are set to give Wall Street an early boost Thursday, with Apple’s Q2 update, GDP data and a surging U.S. dollar also in focus.
Updated at 8:34 am EST
U.S. equity futures moved firmly higher Thursday, powered by surging tech stock sentiment ahead of Apple’s closely-watch second quarter earnings later today, as investors tracked a relentless climb for the dollar and a modest move higher in Treasury bond yields ahead of a key reading of domestic growth prior to the start of trading.
The Commerce Department’s first estimate of first quarter GDP estimate, however, showed the first contraction in two years amid a sharp slowdown in the world’s biggest economy. GDP was pegged at -1.4%, the data indicated, firmly should of the Street estimate of a 1.1% growth rate for the three months ending in March.
The early year Omicron wave, as well as the fastest inflation in forty years and the Federal Reserve’s rate hike signaling have all combined to blunt consumer sentiment and slow growth from the near 7% pace recorded over the final three months of last year, while the dollar’s recent surge has kept export markets firmly in check.
The dollar index, in fact, is testing the highest levels in 20 years against a basket of its global peers, rising 0.8% on the session to 103798, with gains built on bets of faster and deeper Fed rate hikes over the coming months.
The CME Group’s FedWatch tool now suggests a 96.5% chance of a 50 basis point move early next month, that would take the base Fed Funds rate to a range of 0.75% to 1%, with an 80% chance of a 75 basis point move in June.
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On Wall Street, earnings continue to drive sentiment — as they have for much of the week — following better-than-expected updates from Facebook parent Meta Platforms (FB) – Get Meta Platforms Inc. Class A Report last night, as well as a bullish outlook from Ford Motor Co. (F) – Get Ford Motor Company Report.
Investors will also digest another wave of pre-market earnings, with updates from Eli Lilly (LLY) – Get Eli Lilly and Company Report, Merck & Co. (MRK) – Get Merck & Co., Inc. Report, McDonald’s (MCD) – Get McDonald’s Corporation Report, Mastercard (MA) – Get Mastercard Incorporated Class A Report and Twitter (TWTR) – Get Twitter, Inc. Report, as well as Apple (AAPL) – Get Apple Inc. Report, Amazon (AMZN) – Get Amazon.com, Inc. Report and Intel (INTC) – Get Intel Corporation Report after the close of trading.
With all of that ahead in the next few hours, futures contacts tied to the Dow Jones Industrial Average are indicating a 215 point opening bell gain while those linked the S&P 500 are priced for a 50 point move to the upside. Futures linked to the tech-focused Nasdaq are looking at a 230 point opening bell advance.
Meta Platforms shares surged in pre-market trading after the social media group posted a rebound in posted a rebound in daily active users that offset a near $3 billion loss in its metaverse and the slowest revenue growth in ten years.
Apple shares moved higher in pre-market trading ahead of its second quarter earnings after the close of trading, perhaps the most anticipated of the reporting season, with investors focused on the tech giant’s ability to navigate past chip shortages and production shutdowns to meet demand for its 5G-enabled iPhones.
McDonalds jumped 2% after stronger-than-expected first quarter earnings as menu price hikes and solid global sales helped offset the impact of its suspension of business in Russia and higher food and labor costs.
Eli Lilly gained 3% on its better-than-expected first quarter earnings Tuesday, and improved revenue forecast, thanks in part to impressive sales growth for its blockbuster diabetes treatment.
Shares were also given a boost by “best case scenario’ data from a late-stage trial of its developing obesity drug, Tirzepatide, which showed patients achieving weight loss of around 22.5% in participating patients.
Rival Merck was up 2.5% thanks to stronger-than-expected first quarter earnings, and a boost in its full-year profit guidance, as the drugmaker recorded impressive sales of its Covid and cancer treatments.
Ford F shares gained 3.5% after the carmaker held to its full-year profit forecast despite a surprise second quarter loss linked in part to a hit from its investment in Rivian Automotive (RIVN) – Get Rivian Automotive, Inc. Class A Report.
Teladoc Health TDOC shares, meanwhile, collapsed in pre-market, potentially wiping $4 billion in value from the pandemic-era darling after it lowered full-year sales forecasts following a bigger-than-expected first quarter loss.
