A lackluster quarter for big tech earnings has stocks on the defensive this week, with Friday’s direction also likely to hinge on data the Fed’s preferred inflation gauge at 8:30 am Eastern.
U.S. equity futures moved lower Friday, while the dollar eased from its strongest monthly gains in seven years and Treasury bond yields nudged into the red, as investors looked to test the impact of a mixed set of big tech earnings on an already-fragile stock market heading into the final trading day of April.
Apple’s (AAPL) – Get Apple Inc. Report March quarter earnings beat, which saw iPhone sales rise even amid Covid-triggered shutdowns in China and ongoing disruptions in global supply chains and semiconductor supplies, was clouded by a muted near-term outlook. Amazon (AMZN) – Get Amazon.com, Inc. Report, meanwhile, posted a surprise first quarter loss, with surging expenses and the weakest revenue growth in a decade.
The reads added to an overall mood of unease in global stocks, which have suffered through their largest monthly retreat in two years, as data from the Commerce Department yesterday indicated a sharp slowdown in the U.S. economy even as interest rate traders continue to price-in 150 basis points worth of rate hikes from the Federal Reserve over the next two policy meetings, starting with next week’s in Washington.
The Fed’s preferred measure of inflation, the core PCE Price index, may also add support for deeper rate hikes, although economists are expecting a modest decline from last month’s multi-decade highs when the data is published at 8:30 am Eastern time.
The rate bets have lifted the U.S. dollar to its best monthly gains in seven years, although the greenback eased in overnight trading against a basket of its global peers, with the advance blunting the impact of overseas revenue growth for S&P 500 companies.
European stocks were marked 0.6% higher in mid-day Frankfurt trading, but are still on pace to finish out the month with a 1.4% decline, while the region-wide MSCI ex-Japan index lumped 2.45% for its best single-day gain in six weeks.
On Wall Street, futures contacts tied to the Dow Jones Industrial Average are indicating a modest 130 point opening bell decline ahead of earnings from Chevron (CVX) – Get Chevron Corporation Report and Honeywell (HON) – Get Honeywell International Inc. Report while those linked the S&P 500, which is down 5.4% for the month, are priced for a 35 point move to the downside ahead of updates from Exxon Mobil (XOM) – Get Exxon Mobil Corporation Report, Bristol-Myers (BMY) – Get Bristol-Myers Squibb Company Report and Colgate Palmolive (CL) – Get Colgate-Palmolive Company Report .
Futures linked to the tech-focused Nasdaq are looking at a 150 point opening bell dip.
Apple shares moved lower in pre-market trading after cautioning investors that supply chain disruptions, particularly around what CEO Tim Cook called the “Shanghai corridor”, as well as the war in Ukraine, would clip between $4 billion and $8 billion from current quarter revenues.
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The outlook clouded an otherwise solid second quarter earnings beat, which showed the world’s biggest tech company earnings more than $59.6 billion for the three months ending in March, the group’s fiscal second quarter.
Amazon shares slumped lower in pre-market trading after the world’s biggest online retailer posted a a surprise first quarter loss Thursday, thanks in part to a $7.6 billion write down on its investment in EV maker Rivian RIVN, while forecasting softer-than-expected near-term profits.
Amazon’s March quarter loss as $7.56 per share, against a Street forecast of profits topping $8 per share, with revenues up only 7% from last year — the slowest growth rate in a decade — to $116.3 billion.
Honeywell umped 2.15% after the as the aerospace-focused engineering group posted stronger-than-expected first quarter earnings Friday, while narrowing the range of its full-year profit forecast.
Chevron posted better-than-expected first quarter earnings Friday as profits rose nearly fourfold from last year amid a record surge in U.S. gas prices and a spike in global crude linked to Russia’s invasion of Ukraine.
Exxon, however, posted weaker-than-expected first quarter earnings Friday, thanks to a massive hit from its plans to exit operations in Russia, sending shares lower in pre-market trading.
Tesla (TSLA) – Get Tesla Inc Report shares jumped 1.4% higher after CEO Elon Musk said he was done selling shares of his clean-energy car company after dumping near $4 billion in stock to pay for his $44 billion takeover of social media group Twitter (TWTR) – Get Twitter, Inc. Report.
