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US Stock Futures Plummet as Earnings Disappoint; Alphabet Takes a Hit: Markets Wrap

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“Tech giant Alphabet’s disappointing earnings report triggers a slide in US stock futures, highlighting the impact of corporate performance on market sentiment.”



US equity-index futures dropped after Microsoft Corp. and Google’s parent Alphabet Inc. delivered a mixed picture of big tech earnings. Contracts on the Nasdaq 100 sank 0.6% and those on the S&P 500 were down 0.4%. Alphabet fell more than 7% in premarket trading after its cloud unit reported a smaller than expected profit. Microsoft, on the other hand, climbed after results in its cloud business beat expectations. Meanwhile, Texas Instruments Inc. dropped after a disappointing revenue forecast suggested that demand remains sluggish for a broad range of electronic components.

With earnings season in full swing, investors are looking for evidence on how companies are coping with high interest rates and whether consumer spending is changing because of inflation. Meta Platforms Inc., the parent company of Instagram and Facebook, is set to report later Wednesday, with Amazon.com Inc due Thursday.

“Tech earnings got off to a mixed start thanks to a focus on cloud computing, one of the big money spinners for the sector,” said Chris Beauchamp, chief market analyst at IG Group. “It’s now up to Meta tonight and Amazon tomorrow to provide the kind of good news that might give stocks a reason to rally into month-end.”

Europe’s stock benchmark was also weaker as earnings from some of the region’s biggest consumer-facing companies stoked concerns that a global economic slowdown is hurting corporate profits. Kering SA slid after the Gucci owner reported a drop in sales amid a global slowdown in luxury, while home products company Reckitt Benckiser Group Plc fell after sales missed expectations. Worldline SA plunged more than 50%, the most ever, after the French payment company lowered its outlook for this year. Peer Nexi SpA slumped more than 10%.

The Treasury 10-year yield rose four basis points and a gauge of the dollar was steady. Elevated bond yields continue to weigh on appetite for equities, with major central banks set to hold policy rates high to bring down inflation.

“Rates will likely trade within recent ranges, but we do think that the latest US data provides some support to the higher-for-longer theme,” said Evelyne Gomez-Liechti, a strategist at Mizuho International. “We wouldn’t be surprised to see 10-year Treasury yields testing the 5% handle again.”

Shares in Asia pushed higher after the government stepped up support for China’s economy and stock trading. The Hang Seng Tech Index gained 2.2%. Meanwhile, troubled Chinese developer Country Garden Holdings Co. was deemed to be in default on a dollar bond for the first time, amid the broader property-debt crisis that’s shaken China’s economy.

Global benchmark Brent crude was steady after dipping below $88 a barrel, and has now erased about half of its gains since Hamas’ attack on Oct. 7, while West Texas Intermediate traded near $83. The US and Saudi Arabia agreed to pursue diplomatic efforts, the White House said Tuesday, helping to ease fears of major disruptions to the oil market.

Bank of Japan officials are likely to monitor bond yield movements until the last minute before making a decision on whether to adjust the yield curve control program at a policy meeting next week, according to people familiar with the matter. The yen was little changed Wednesday.

Key events this week:

– Canada rate decision, Wednesday
– US new home sales, Wednesday
– IBM, Meta earnings, Wednesday
– European Central Bank interest rate decision; President Christine Lagarde holds news conference, Thursday
– US wholesale inventories, GDP, US durable goods, initial jobless claims, pending home sales, Thursday
– Intel, Amazon earnings, Thursday
– China industrial profits, Friday
– Japan Tokyo CPI, Friday
– US PCE deflator, personal spending and income, University of Michigan consumer sentiment, Friday
– Exxon Mobil earnings, Friday

And here are some of the main market moves:

Stocks:
– The Stoxx Europe 600 fell 0.3% as of 9:55 a.m. London time
– S&P 500 futures fell 0.4%
– Nasdaq 100 futures fell 0.6%
– Futures on the Dow Jones Industrial Average were little changed
– The MSCI Asia Pacific Index rose 0.3%
– The MSCI Emerging Markets Index was little changed

Currencies:
– The Bloomberg Dollar Spot Index rose 0.1%
– The euro was little changed at $1.0586
– The Japanese yen was unchanged at 149.91 per dollar
– The offshore yuan fell 0.1% to 7.3223 per dollar
– The British pound fell 0.2% to $1.2136

Cryptocurrencies:
– Bitcoin rose 0.6% to $33,858
– Ether fell 0.1% to $1,769.98

Bonds:
– The yield on 10-year Treasuries advanced four basis points to 4.86%
– Germany’s 10-year yield advanced two basis points to 2.85%
– Britain’s 10-year yield advanced two basis points to 4.56%

Commodities:
– This story was produced with the assistance of Bloomberg Automation.

–With assistance from Michael Msika, Sujata Rao and Cecile Gutscher.

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©2023 Bloomberg L.P.

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