Futures tied to the tech-heavy Nasdaq index fell more than 1% on Wednesday as disappointing results and warnings from Microsoft and Alphabet sparked losses among megacap companies and raised fears of slowing economic growth.
Microsoft Corp posted itslowest sales growth in five years and forecast second-quarter revenue below Wall Street estimates, while Alphabet reported downbeat ad salesand warned of a slowdownin advertising spending.
Shares of both companies fell around 6% each in premarket trading and weighed on Amazon.com and Apple, which are scheduled to report results later this week. They were down 3.2% and 0.4%, respectively.
Market Snapshot
At 6:50 a.m. ET, Dow e-minis were down 34 points, or 0.11%, S&P 500 e-minis were down 29 points, or 0.75%, and Nasdaq 100 e-minis were down 200.5 points, or 1.71%.
Pre-Market Movers
Alphabet (GOOGL) – Alphabet slumped 6.2% in the premarket after it reported lower-than-expected quarterly profit and revenue. Alphabet's Google unit saw its fifth consecutive quarter of slower sales growth, and its YouTube operation saw ad revenue drop for the first time since the company began breaking out the unit's results.
Microsoft (MSFT) – Microsoft took a 6% premarket hit following its quarterly results despite beats on both its top and bottom lines. Microsoft expects a significant decline in personal computer sales, which will in turn continue to hit sales of its Windows operating system. The company also forecast an impact from a stronger U.S. dollar.
Visa (V) – Visa reported better-than-expected profit and revenue for the third quarter as payment volumes jumped. Visa shares gained 2% in the premarket.
Spotify (SPOT) – Spotify shares slid 6.3% in premarket action after the streaming service posted a wider-than-expected loss. Spotify's revenue came in slightly above analyst forecasts and its monthly active user total exceeded estimates.
Boeing (BA) – Boeing added 1% in the premarket in spite of reporting an unexpected quarterly loss and revenue that fell below Street forecasts. The jet maker maintained its yearly cash flow forecast despite difficulties in elevating commercial jet production.
Hilton Worldwide (HLT) – Hilton added 1% in the premarket after reporting better-than-expected quarterly earnings and raising its full-year forecast. The hotel operator continues to benefit from strong travel demand.
Harley-Davidson (HOG) – Higher shipments and strong pricing helped the iconic motorcycle maker beat top and bottom line estimates with its quarterly results. Harley shares gained 3.7% in premarket trading.
Waste Management (WM) – Waste Management shares jumped 3% in premarket action after reporting better-than-expected quarterly earnings. The company said it benefited from continued strength in its trash collection business and successful cost controls.
Kraft Heinz (KHC)– The food producer's shares rallied 3.2% following its quarterly results, which saw it beat top and bottom line estimates as it successfully raised prices. That helped offset reduced demand.
Mobileye (MBLY)– Mobileye priced its initial public offering at $21 per share, above the expected range of $18 to $20. Chipmaker Intel (INTC), which bought the self-driving car systems maker in 2017 for $15.3 billion, will maintain voting control.
Mattel (MAT)– Mattel slid 5.5% in premarket trading after the toy maker cut its full-year profit forecast. It plans to increase holiday season promotions to offset inflation-induced consumer reluctance. Mattel reported a better-than-expected profit for its latest quarter, with revenue falling slightly shy of analyst forecasts.
Market News
Cloud to PCs, Microsoft Forecasts Spook Investors As Economy Bites
Microsoft Corp on Tuesday projected second-quarter revenue below Wall Street targets across its business units, stoking fear that macroeconomic headwinds are impacting the cloud business in addition to the PC unit.
Revenue growth in the first quarter was Microsoft's lowest in five years.
Microsoft's cloud business, called Azure, has supercharged revenue growth at the software giant for years. But in its first fiscal quarter of 2023, that growth dropped to 35% and the company projects that to drop again in the current quarter, which is its second quarter. Microsoft missed the 36.5% analyst target compiled by Visible Alpha due to a stronger dollar.
Alphabet's Miss Fans Inflation Fears Across Digital Advertising
Google parent Alphabet Inc's disappointing ad sales sparked worries across the digital media sector on Tuesday as advertisers cut back on their spending in the face of an economic slowdown.
Alphabet called out slowing spending by advertisers on YouTube, said financial services spending was cooling on Google, and plans to cut hiring by more than half.
The negative results shattered many expectations that Google, which is the world's largest digital advertising platform by market share, would remain strong in a weakening economy and reinforced worries on Wall Street that inflation will continue to hurt advertising spending. Last week, smaller rival Snap Inc's slowest-ever revenue growth rate sent inflation fears through tech sector and temporarily wiped out $40 billion in market capitalization.
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