Five things you need to know before the market opens on Wednesday April 26:
1. -- Stock Futures Higher As Tech Earnings Offset Bank Sector Concerns
U.S. equity futures bumped higher Wednesday, while Treasury yields slumped and the dollar moved lower against its global peers, as investors looked to better-than-expected tech earnings to offset concerns over the strength of the regional banking sector and fading economic growth prospects.
Stocks recorded their worst single-day decline since mid March yesterday, with the S&P 500 falling 65 points, as First Republic FRC shares hit a record low following a big decline in the lender's deposit base over the first quarter and reports is planning to offload around $100 billion in assets to steady its balance sheet.
The Conference Board's index of consumer confidence, meanwhile, slumped to the lowest levels since July, following on from a series of weaker-than-expected readings of manufacturing activity around various Fed regions.
The sell-off was muted slightly by last night's pair of big tech earnings reports, which showed moderating declines in ad sales for Google parent Alphabet and indicated solid near-term potential for profit and revenue gains from Microsoft's market-leading foray into AI technology.
Fixed income markets, however, continue to paint a grim outlook for U.S. economic growth, with 2-year Treasury note yields falling below the 4% mark in overnight trading, to 3.922%, and 10-year notes retreating to 3.407% heading into today's session.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.5% lower at 101.339 as traders priced in a greater chance of a Fed rate cut later in the year.
CME Group futures, however, still indicate a more than 80% chance that the Fed will lift its benchmark rate by 25 basis points, to between 5% and 5.25%, at next week's meeting in Washington.
Heading into the start of the trading day on Wall Street, futures tied to the the S&P 500 are priced for a 16 point opening bell gain while those linked to the Dow Jones Industrial Average are set for a 15 point bump. The tech-focused Nasdaq was marked 155 points higher, thanks to a blowout gain for Microsoft and solid pre-market moves for Meta Platforms.
Overnight in Asia, the region-side MSCI ex-Japan index was marked 0.17% higher into the close of trading, while bank stock declines pulled the Nikkei 225 0.71% lower in Tokyo heading into the first Bank of Japan policy meeting under new Governor Kazuo Ueda later in the week. European stocks fell 0.75% lower in early Frankfurt dealing.
2. -- Microsoft Surges As Cloud Boosts Q3 Earnings, AI Supports Outlook
Microsoft (MSFT) shares surged higher in pre-market trading after the tech giant topped Street forecasts in its third quarter earnings thanks to ongoing strength in its cloud computing division.
Microsoft said revenues for Azure, its flagship cloud division, rose 27% from last year over the three months ending in March, missing Street forecasts and slowing from earlier gains in the mid to high 40-percent range as companies continue to pull back on digital infrastructure spending.
Overall group revenues, however, rose 7.2% to $52.9 billion for Microsoft's fiscal second quarter, coming in well ahead of analysts' estimates of a $49.36 billion tally. Intelligent Cloud revenues were pegged at $22.08 billion, against ahead of the Street's $21.26 billion forecast and up 22% from the same period last year.
Microsoft's adjusted earnings rose 10.4% from last year to $2.27 per share, just ahead of the Street consensus forecast of $2.23 per share. Net income rose 9% to $18.3 billion.
Microsoft shares were marked 7.5% higher in pre-market trading to indicate an opening bell price of $296.20 each.
3. -- Google Shares Higher On Resilient Ad Spending, $70 Billion Buyback Plans
Alphabet (GOOGL) shares edged higher in pre-market trading following better-than-expected first quarter earnings from the Google parent that included resilient ad revenues and planned spending cuts.
Google posted a bottom line of $1.17 a share, down 4.9% from last year but 10 cents ahead of the Street on revenues of $69.78 billion, a 2.6% bump from last year's total that also beat the Street consensus forecast.
Google said revenues from YouTube, its signature non-search platform, fell 2.6% to around $6.69 billion over the three months ending in March, a slower rate of decline than over the January quarter, while overall ad sales were effectively flat to last year at $54.55 billion.
The tech giant, which unveiled plans in January to cut around 12,000 jobs from its global workforce, said the layoffs would likely cost around $2.6 billion in severance and related charges, including the optimization of its real estate footprint.
Google also said it would buy back around $70 billion of its shares and posted the first-ever profit for its cloud division, which saw sales rise 28% from last year to $7.41 billion.
Google shares were marked 0.5% higher in pre-market trading to indicate an opening bell price of $104.34 each
4. -- Meta Earnings On Deck Amid Zuckerberg's 'Year of Efficiency'
Meta Platforms (META) shares moved firmly higher in pre-market trading ahead of the group's first quarter earnings after the closing bell.
CEO Mark Zuckerberg, who deemed 2023 a "year of efficiency" for the social media group, has executed a series of major headcount reductions over the past six months, including a recent spate of cuts that eliminated another 4,000 people from its global payroll.
The moves come amid a pullback in ad spending across major social media platforms and the relentless market share gains for China-based TikTok, which now has more than more than a billion active users across 154 countries. Steep losses in the group's Metaverse project have also pushed the company into cost-cutting mode.
Meta, the parent of Facebook, Instagram and WhatsApp, is forecast to post first-quarter earnings of $2.03 a share, down 25% from last year, with revenue roughly flat at $27.62 billion.
Meta shares were marked 1.95% in pre-market trading to indicate an opening bell price of $211.59 each, with the gains linked in to part to Google's better-than-expected first quarter ad sales.
5. -- Boeing Higher Ahead of Earnings Following Solid Q1 Deliveries
Boeing (BA) shares edged higher in pre-market trading ahead of the planemaker's first quarter earnings prior to the opening bell.
Boeing, which overtook its European rival Airbus in terms of first quarter deliveries for the first time in nearly five years, is nonetheless expected to post a loss of $1.07 per share on revenues of $17.57 billion.
Boeing said it delivered 64 planes in March, taking its first-quarter tally to 130 aircraft, just ahead of the 127 total reported by Airbus EADSY. The Q1 figures included 113 of its 737 Max and 11 units of its wide-body 787 Dreamliner.
Boeing's order book has also seen some impressive gains so far this year, including the first-ever sale of its workhorse 737 Max jets to Japan Airlines late last month. The planemaker's overall aircraft order book totals around 4,555 aircraft and approaches $500 billion in value. Further details are expected when the group posts its first-quarter earnings before the market opens on April 26.
Boeing shares were marked 0.28% higher in pre-market trading to indicate an opening bell price of $202.75 each.
