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Stock futures extend losses as investors digest tech earnings, await Fed

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Stock futures added to losses in late trading on Tuesday, with investors digesting a slew of Big Tech earnings results and looking ahead to another set of reports on Wednesday. A monetary policy statement from the Federal Reserve is also slated for release.

Contracts on the S&P 500 dipped about 0.25% at the start of the overnight session. The index, as well as the Dow and Nasdaq, pulled back from record levels during the regular trading day. 

Shares of Apple (AAPL) and Microsoft (MSFT) fell in late trading even after both tech titans handily exceeded Wall Street’s estimates in their latest earnings reports. Apple executives, however, said they expected a deceleration in top-line growth in the current quarter after a blowout April through June period, and that supply challenges would weigh on hardware like the iPhone. And investors appeared to home in on a slightly disappointing result from Microsoft’s Azure cloud business, which decelerated over last quarter to 45% sales growth when excluding currency impacts. 

The after-hours move higher in shares of Google’s parent-company Alphabet (GOOGL), however, tracked the strong beat in quarterly sales and profits. A rebound in travel-related advertising spending and continued growth in YouTube ads helped power revenue, excluding traffic-acquisition costs, to $51 billion, for a surge of 61% over last year. 

Earnings are set to continue on Wednesday, with major names including Boeing (BA), Pfizer (PFE) and McDonald’s (MCD) posting results before market open, and Facebook (FB) and PayPal (PYPL) reporting after the close. 

Investors are also set to closely monitor the Federal Open Market Committee’s July monetary policy decision and Federal Reserve Chair Jerome Powell’s latest public remarks Wednesday afternoon. In the weeks since the Fed’s June meeting, concerns over the Delta variant have brought about additional concerns over the economic outlook. However, inflation prints have also been coming in hotter-than-expected both at the consumer and producer level, challenging the Fed’s ability to keep its ultra-accommodative monetary policy in place. And inflation mentions during corporate earnings calls this season have already risen by a staggering 1,000% over last year, according to Bank of America. 

“Since the June meeting, job growth has strengthened more than anticipated and inflation continued to coming much hotter. No doubt, that will keep eyes and ears keenly attuned to signs that the FOMC may pull forward the eventual tapering of asset purchases, a topic it has already confirmed will be on the table,” Wells Fargo senior economist Sam Bullard wrote in a note. 

“Discussions around the pace and composition of tapering will deepen at this week’s meeting, as the split in officials’ views is still there and it will take some time to build a consensus,” he said. “Most Fed officials view the recent rise in inflation as largely ‘transitory,’ though it will be interesting to see if Chair Powell expresses any additional awareness/cautiousness to upside inflation risk.”

6:06 p.m. ET Tuesday: Stock futures add to losses

Here were the main moves in markets as the overnight session kicked off on Tuesday: 

  • S&P 500 futures (ES=F): -13 points (-0.3%) at 4,381.50

  • Dow futures (YM=F): -95 points (-0.27%) to 34,858.00

  • Nasdaq futures (NQ=F): -70.25 points (-0.47%) to 14,877.5

  • Crude (CL=F): +$0.24 (+0.33%) to $72.15 a barrel

  • Gold (GC=F): -$1.80 (-0.1%) to $1,797.40 per ounce

  • 10-year Treasury (^TNX): unchanged, yielding 1.295%

NEW YORK , NY – JUNE 02: Exterior view of the New York Stock Exchange and Wall St. as new company Organon start trading next thursday in New York on June 02 2021. Organon look to expand to provide treatments for other conditions unique to women, about 80% of the new company’s revenues will come from outside the U.S (Photo by Kena Betancur/VIEWpress)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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