Breaking News: Big Tech Stocks Surge on Strong Earnings
Overview
Traders on the floor of the New York Stock Exchange on Aug. 4, 2022.
Source: NYSE
Stock Futures Rise as Alphabet and Microsoft Impress
S&P 500 futures rose on Friday as technology giants Alphabet and Microsoft witnessed a surge in their share prices. The broad market index saw a climb of 0.9%, while Nasdaq 100 futures recorded a 1.15% increase. Futures on the Dow Jones Industrial Average also gained 0.15%.
Alphabet and Microsoft Outperform
Alphabet, the parent company of Google, witnessed an impressive 11% jump in share prices during extended trading hours following their better-than-expected first-quarter earnings. The company also authorized a groundbreaking $70 billion buyback and announced its first ever dividend.
Meanwhile, Microsoft saw a 4% increase in its shares after the software giant reported impressive fiscal third-quarter results that surpassed analysts’ expectations.
Market Expectations and Stock Performance
The strength in these major technology companies may provide a much-needed boost to the market following a day of losses on Wall Street. On Thursday, the Dow Jones Industrial Average dropped 375 points, while the S&P 500 and the Nasdaq Composite slid 0.5% and 0.6% respectively.
Mixed Economic Data Triggers Thursday’s Sell-off
Thursday’s market sell-off was triggered by new U.S. economic data, revealing a significant slowdown in economic growth and rising inflation. The gross domestic product expanded by 1.6% in the first quarter, falling short of the Dow Jones forecast of 2.4%. Additionally, the personal consumption expenditures price index rose at a 3.4% pace, significantly higher than the previous quarter.
According to Bill Adams, chief economist at Comerica Bank, the Federal Reserve may be more concerned about inflation exceeding targets in the first quarter rather than slower economic growth. It is expected that the Fed may slow the pace of their balance sheet runoffs and potentially reduce interest rates starting in September.
Positive Week Despite Recently Bearish Market
Despite recent market uncertainties, major stock averages are on track for a winning week. The S&P 500 has risen by 1.6% and is poised to break a three-week losing streak. The Nasdaq Composite has gained more than 2% and is set for its first positive week in five. The Dow has seen a more modest increase of 0.3% this week.
Current Earnings Trend
Approximately 38% of the S&P 500 companies have already reported quarterly results, and almost 80% of them have exceeded earnings expectations.
Upcoming Earnings and Economic Data
Investors are eagerly awaiting the earnings reports of Chevron and Exxon Mobil, to be released before the opening bell on Friday. Additionally, March’s Personal Consumption Expenditures (PCE) reading, a closely watched measure of inflation by the Federal Reserve, will be released on Friday morning.
