A disappointing earnings season has stocks giving back some of their January gains again Wednesday as Microsoft slumps and Boeing posts a surprise loss.
U.S. equity futures moved lower Wednesday, while the dollar inched higher against its global peers and Treasury yields retreated, as markets react to an underwhelming corporate earnings season.
Microsoft’s softer-than-expected profit forecast, which clouded an otherwise solid December quarter earnings report, following muted updates across the industrial, tech and consumer sectors Tuesday, and looks set to keep bullish sentiment in check ahead of another stretch of earnings reports before and after the bell.
Boeing, AT&T, Abbott Labs (ABT) – Get Free Report and Freeport-McMoRan (FCX) – Get Free Report also reported earnings this morning, with Tesla and IBM (IBM) – Get Free Report expected after the closing bell.
Prior to the start of the week, analysts had forecast that collective S&P 500 earnings would fall 2.9% from last year to a share-weighted $443.4 billion, before recording a modest 0.1% expansion over the three months ending in March.
That calculus may change, however, as more and more companies cite economic uncertainty, persistent inflation and a pullback in consumer spending as headwind to their near-term profit forecasts.
In concert, Treasury bonds yields are trading firmly lower heading into the Wednesday session, following the strongest 2-year bond auction in more than two years yesterday and concerns that the U.S. may slip into recession over the first half of this year.
Benchmark 10-year Treasury note yields were marked 4 basis points lower in overnight trading 3.434% while 2-year notes fell to 4.148%. The U.S. dollar index, which tracks the greenback against a baskets of its global peers, was marked 0.09% higher at 102.011.
Heading into the start of the trading day on Wall Street, futures tied to the the S&P 500 are priced for a 43 point opening bell decline while those linked to the Dow Jones Industrial Average are set for a 272 point decline. The tech-focused Nasdaq was marked 195 points lower.
Boeing (BA) – Get Free Report shares slumped 2.6% after it posted a surprise fourth quarter loss but noted its first positive free-cash flow tally in more than four years, and reaffirmed its full-year profit guidance.
AT&T Inc. (T) – Get Free Report around 28% after it posted better-than-expected fourth quarter earnings with a muted near-term outlook while adding that it plans to pay down debt as a top priority after meeting dividend payments.
Tesla (TSLA) – Get Free Report shares, meanwhile, fell 1.7% as investors looked with caution towards the carmaker’s pivotal fourth quarter earnings report after the close of trading, with focus likely to center on the impact of recent cost cuts to its impressive profit margins.
Fox shares were marked 2.42% higher in pre-market trading to indicate an opening bell price of $31.14 each while News Corp gained 4.5% to $20.80 each.
In overseas markets, Europe’s Stoxx 600 slipped 0.7% amid a mixed December quarter earnings season and economic activity data showing business sentiment in Germany, the region’s biggest economy, picked-up momentum over the month of January.
In Asia, the region-wide MSCI ex-Japan index touched a fresh seven-month high in early trading, although markets in China remain closed for the Lunar New Year celebrations. Japan’s Nikkei 225 gained 0.35%.
Billionaire Rupert Murdoch scrapped plans to merge Fox Corp FOXA and News Crop NWSA, the two media empires he controls with his son, following criticism from key shareholders.