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The Street
The Street
Business
Martin Baccardax

Stocks Rebound On Earnings, Microsoft, Google, Twitter And Visa In Focus - Five Things You Must Know

Here are five things you must know for Wednesday, April 27:

1. -- Stock Futures Rebound On Earnings Boost, But Bears Continue to Lurk  

U.S. equity futures looked to rebound from one biggest single-day declines of the past two years Wednesday, with investors hoping that stronger-than-expected tech earnings can boost sentiment amid the collective concerns over Fed rate hikes, China's Covid lockdown and Russia's war on Ukraine. 

Microsoft MSFT shares could provide some early thrust for tech stocks following its better-than-expected third quarter earning last night, with the heavyweight cloud and computing group helping the Nasdaq recover from a 514 point plunge that dragged the index to its lowest levels since December of 2020.

Tech sentiment, however, will need to fight against a worrying escalation of tensions between Russia and its European neighbors after the state-controlled energy giant Gazprom cut off natural gas supplies to Poland and Bulgaria for failing to meet an earlier demand to pay in roubles.

The move, widely seen as a warning to Germany and other western European states that have challenged Russia's February invasion of Ukraine, helped push the euro to a five-month low of 1.0597 against the U.S. dollar and kept gains for regional stocks muted in early Frankfurt trading.

The U.S. dollar index, meanwhile, continues to print multi-year highs against its global peers -- amid its best April gain in more than five years -- and was marked another 0.43% in overnight trading to 102.738 as traders price-in the impact of 50 basis point rate hikes at both of the Federal Reserve's next two policy meetings and move into safe-haven assets.

That, in part, has lifted the market's key volatility index, the VIX, well past the 30 point mark, a level traders typically associate with large intra-day moves for major U.S. indices.   

That, as well as another busy slate of corporate earnings with likely capture attention on Wall Street again Wednesday, with Boeing (BA), T-Mobile US (TMUS) and Kraft Heinz (KHC) reporting before the bell and Meta Platforms (FB), Ford (F), PayPal (PYPL) and Qualcomm (QCOM) expected after the close of trading. 

Futures contacts tied to the Dow Jones Industrial Average are indicating a 390 point opening bell gain while those linked the S&P 500, which is down12.4% for the year, are priced for a 41 point move to the upside. Futures linked to the tech-focused Nasdaq are looking at a 137 point opening bell advance.

2. -- Microsoft Forecasts Impressive Cloud Growth, Erasing Azure Concerns

Microsoft shares leapt higher in pre-market trading after the tech giant forecast stronger-than-expected revenue growth for its key divisions, offsetting concerns over the pace of gains in its Azure cloud offering.

Microsoft said revenues for its Intelligent Cloud division, which houses Azure, would likely rise to $21.1 billion and $21.35 billion for the current quarter, with double-digit percentage gains in the group's coming fiscal year. 

Third quarter revenues for Azure, its flagship cloud offering, rose 46% from last year -- but flat to the December quarter -- helping overall group sale rise 18% to a record $49.4 billion for the three months ending in March, Microsoft's fiscal third quarter.  Microsoft's adjusted earnings rose 13.8% from last year to $2.22 per share, just ahead of the Street consensus forecast of $2.19 per share.

"Microsoft’s results, guidance, and tone were bullish for MSFT shares, and perhaps could serve to modestly help alleviate pervasive macro fears for software investors more broadly," said BMO Capital Markets analyst Keith Bachman.   

Microsoft shares were marked 5.3% higher in pre-market trading to indicate an opening bell price of $284.50 each.

3. -- Google Shares Slide On Revenue Miss, $70 Billion Buyback Softens Blow

Alphabet (GOOGL) shares slumped lower in pre-market trading after the search and ad sales giant posted softer-than-expected first quarter revenues amid a global pullback in ad sales linked in part to Russia's war on Ukraine.  

Google's top line fell 6.7% from last year to 24.62 per share over the three months ending in March, a tally that missed Street forecasts by around $1.14. Group revenues also disappointed, even after rising 23% to $68.01 billion, as ad sales were only in-line with the Street at $54.66 billion. YouTube ad sales, however, were well shy of forecasts at $6.9 billion as Google suspended activities in Russia and European clients tightened marketing budgets.

The addition of a $70 million share buyback to the group's capital return plans halted some of last night's post-market slump, but Google shares were still marked 2.5% lower in pre-market trading to indicate an opening bell price of $2,314.25 each.

4. -- Twitter Shares Extend Slide Amid Questions Tied to Musk's Takeover

Twitter (TWTR) shares extended declines in pre-market trading, falling well below the $54.20 level Elon Musk has agreed to pay for the social media website, as investors continue to question terms of the Tesla CEO's $44 billion takeover.

Securities and Exchange Commission filings published late Tuesday indicate that Musk, by some measures the world's richest man, will be required to pay a $1 billion termination fee if his effort to buy Twitter and take it private fails. 

Twitter is also required to pay Musk a similar amount, the filings indicated, although both sides will have the option of walking away if the takeover isn't completed by October 24. Twitter is also able to accept -- but not solicit -- a superior bid to Musk's if one is proposed. 

Musk may have also breached terms of what is now a merger agreement with Twitter when he Tweeted criticism of the company's decision to censor pre-election reports on Hunter Biden, President Joe Biden's son, and his linked to business leaders in China and Ukraine. 

Twitter shares were marked 2% lower in pre-market trading to indicate an opening bell price of $48.70 each.

5. -- Visa Shares Leap As Spending Rebound Drives Q1 Earnings Beat

Visa (V) shares surged in pre-market trading after the credit card issuer posted much stronger-than-expected first quarter earnings amid a consumer spending rebound powered in part by business and personal travel following a 'short-lived" jump in Omicron infections. 

Visa earned $1.79 per share over the three months ending in March, well ahead of the Street consensus forecast, as group revenues jumped 25% to $7.2 billion. Cross border spending was up 38%, Visa said, and its suspension of payments in Russia only affected around 4% of its revenues and resulted in a modest $60 million charge. 

Earlier this month, American Express (AXP) also smashed Street forecasts with revenue growth of nearly 30%, to $11.74 billion, and a bottom line of $2.73 per share as travel and entertainment budgets swelled. 

"The Omicron variant impacts were short lived and the global economic recovery that began in the middle of last year continued," said Visa CEO Alfred Kelly  

Visa shares were marked 4.75% higher in pre-market trading to indicate an opening bell price of $210.66 each.

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