Stock Futures Lower as Big Tech Crashes Earnings Party; Apple Rises After They Beat Q4 Earnings, Expect iPhone 14; Amazon Hit by Weak Holiday Sales Outlook Clouding Third Quarter Earnings; Intel gets more powerful as work goes on, cost-cutting plans ease concerns about demand, and Tesla slips as Musk takes on another CEO role after the Twitter acquisition.
Five things to know before the market opens on Friday, October 28:
1. — Stock futures slide as Big Tech crashes earnings party
US stock futures were lower on Friday, with the Nasdaq leading the declines, after another disappointing series of earnings updates from big tech companies that continue to cast doubt on the resilience of the US economy.
While Apple’s September quarter numbers beat forecasts, muting iPhone growth rates and a slowdown in services revenue, they clouded the tech giant’s conservative holiday forecast. Meanwhile, Amazon missed Street’s estimates for December quarter sales by around $5 billion and, like Apple, noted a bigger-than-expected headwind from the rising US dollar.
The latest updates on Thursday cap a grim weakness in earnings at big tech companies, which saw notable declines for both Microsoft and Google, and have reset expectations for the third and fourth quarters. S&P 500 total gains despite a solid round of upgrades from industrial, consumer and pharmaceutical companies.
Stocks, however, are finding relief in the form of lower Treasury yields, which have pulled back steadily over the past week amid easing bets on large Federal Reserve interest rates until the end of the year following dovish policy decisions by the Bank of Canada and the European Central Bank earlier this week.
Benchmark 10-year bond yields were last quoted at 3.974%, down from last week’s fifteen-year high of 4.375%, while 2-year bonds fell to 4.351%. Meanwhile, CME Group’s FedWatch suggests just a 37% chance of a 75 base point rate hike in December, while noting the near certainty of a similar move at the Fed’s policy meeting next week in Washington.
Those moves could be tested today, however, by data from the Bureau of Economic Analysis, which is to release its September reading of the Fed’s preference. inflation caliber, the PCE Price index. at 8:30 a.m. Eastern time.
Heading into the start of the trading day on Wall Street, futures contracts linked to the S&P 500 are priced down 30 points, while those linked to the Dow Jones Industrial Average are priced down 88 points. The tech-focused Nasdaq is priced for a 130-point drop due to a massive pre-market drop from Amazon.
In overseas markets, the region-wide Stoxx 600 was down 0.6% in early Frankfurt trading after a mixed string of third-quarter gains and data showing Germany’s economy grew modestly in the third quarter, challenging recession fears
Overnight in Asia, stocks remained anchored to two-year lows amid further declines in China, which is seeing renewed surges in Covid infections and a pullback in industrial profits. The MSCI ex-Japan index for the entire region fell 1.9% before the close of trading.
Japan’s Nikkei 225 fell 0.88% following a dovish policy meeting by the Bank of Japan, which made no change to its zero interest rate strategy but revealed plans to buy more government bonds to fight a rise. in market returns.
2. — Apple surges higher after beating fourth-quarter profit, iPhone 14 hopes
Apple (AAPL) – Get the report from Apple Inc. Shares rose in premarket trading after a strong set of fourth-quarter earnings offset a dovish holiday-quarter sales outlook for the world’s largest technology company.
“We did better than we expected, despite the fact that the exchange rate was significantly negative for us,” Chief Financial Officer Luca Maestri told investors in a conference call Thursday night, noting that sales December quarter would suffer 10 percent year-over-year percentage point. YoY impact of rising US dollar.
Apple said holiday sales will likely grow less than 8% from last year, putting the overall figure at around $114 billion, helped by the launch of its new set of iPhones. For the three months ending in September, sales increased 2% to reach a record high in the fourth quarter of $90.15 billion.
iPhone revenue was slightly below forecasts, at $42.62 billion, while services were also weaker, rising just 5% to $19.19 billion. Sales in China rose 6.25% to $15.47 billion
Apple shares rose 0.42% in premarket trading to indicate an opening bell price of $145.41 each.
3. — Amazon Hit by Q3 Earnings from Soft Holiday Sales Outlook Clouds
Amazon (AMZN) – Get the report from Amazon.com Inc. shares fell sharply lower in premarket trading after a disappointing holiday income forecast and slower growth in its lucrative web services business more than offset better-than-expected third-quarter earnings.
Amazon missed Street’s forecasts for both holiday quarter earnings, which it sees in the region of zero to $4 billion, and sales, which were between $40 billion and $148 billion, at compared to Refinitiv’s forecast of around $155 billion.
Amazon said its second-quarter earnings were pegged at $2.9 billion, or 28 cents a share, while revenue rose 14.7% from a year ago to $127.1 billion, just shy of from analyst estimates of $127.45 billion.
“As the third quarter progressed, we saw a moderation in sales growth in many of our businesses, as well as an increase in currency headwinds, and we expect these impacts to persist into the fourth quarter,” said CFO Brian Olsavksy. to investors in a conference call late Thursday.
Shares of Amazon ticked 13.7% lower in premarket trading to signal an opening bell price of $95.79 each, extending the stock’s year-to-date decline to around 42% .
4. — Intel gets more powerful as work goes on, cost-cutting plans ease demand concerns
Intel (INTC) – Get the report from Intel Corporation Shares rose higher in premarket trading after the chipmaker posted stronger-than-expected third-quarter earnings and revealed big job cuts that offset another pullback in its full-year sales forecast.
Intel’s adjusted bottom line for the September quarter was pegged at 59 cents a share, well above Street’s consensus forecast, while revenue fell 15% to $15.3 billion.
Looking ahead to the final months of the year, Intel said it sees revenue in the region of $63.5 billion, down from its previous forecast of between $65 billion and $68 billion.
“We are responding to the current environment by taking aggressive steps to cut costs while conscientiously protecting the investments needed to accelerate our transformation,” CEO Pat Gelsinger told investors in a conference call Thursday night. “Included in our efforts will be steps to optimize our workforce. These are tough decisions that affect our loyal Intel family, but we need to balance increased investment with efficiency measures.”
Shares of Intel, which have fallen more than 50% so far this year, rose 5.25% in premarket trading to indicate an opening bell price of $27.65 each.
5. — Tesla slips as Musk takes on another CEO role after Twitter acquisition
Tesla (TSLA) – Get the Tesla Inc. report Shares rose in premarket trading and CEO Elon Musk has taken on another executive role at Twitter following his $44 billion acquisition of the social media group and the firing of four of its top managers.
Twitter CEO Parag Agrawal, CFO Ned Segal, General Counsel Seam Edgett, and Chief Legal Officer Vijaya Gadde were all fired by Musk on Thursday night, according to multiple media reports, as the world’s richest man moved to become acting head of the group, adding to his portfolio of roles that includes Tesla, SpaceX, Neuralink and The Boring Company.
Musk also plans to reverse several “lifetime” bans imposed on previous high-profile users, including former President Donald Trump, while also vowing to make Twitter “the most respected advertising platform in the world.”
Staff were also preparing for a town hall meeting with Musk at the group’s San Francisco headquarters on Friday, amid reports of job and cost cuts. However, in the coming weeks and months, Musk must also decide how he will repay the lenders who have provided $13 billion in acquisition financing, and he may well choose to sell an additional portion of his Tesla stock to raise the necessary cash. .
Shares of Tesla were marked 1.1% lower in premarket trading to indicate an opening price of $222.70 each. The stock has fallen about 28% since Musk made the acquisition public on Twitter in early April.