Stock futures rose overnight following strong earnings reports from Big Tech giants Alphabet and Microsoft. Alphabet’s stock soared 15% after reporting better-than-expected first-quarter earnings and announcing its first ever dividend and a $70 billion buyback program. Microsoft’s shares also climbed 5% after beating Wall Street’s expectations in its fiscal third-quarter results. These strong performances in megacap stocks could potentially boost the major averages following a losing day on Wall Street, where the Dow Jones, S&P 500, and Nasdaq Composite all closed lower.
The sell-off on Thursday was triggered by new economic data showing a sharp slowdown in U.S. growth and higher inflation. Despite this, major averages are on track for a winning week, with the S&P 500 up 1.6% for the week so far, breaking a three-week losing streak. The Nasdaq has gained over 2%, heading for its first positive week in five, while the Dow is up 0.3% for the week. The Federal Reserve may respond to the inflationary data by slowing the pace of balance sheet runoffs at upcoming meetings but waiting until September to start reducing interest rates.
Nearly 38% of S&P 500 companies have reported quarterly results so far, with almost 80% of them beating earnings expectations. Investors are eagerly awaiting more earnings reports, particularly from big energy firms Chevron and Exxon Mobil due to report on Friday before the bell. The market remains focused on corporate earnings as a key driver of stock performance, with positive results leading to market gains.
The strong performance of Alphabet and Microsoft in particular has helped buoy market futures, with Dow Jones Industrial Average futures up 60 points, S&P 500 futures climbing 0.9%, and Nasdaq 100 futures rising 1.2%. Despite the economic data causing some concern about growth and inflation, the overall trend in the market remains positive, with major averages showing gains for the week and earnings results exceeding expectations.
The Federal Reserve’s response to the recent economic data, particularly the higher inflation rates, will be closely watched by investors in the coming months. The possibility of interest rate reductions could impact market performance in the future, depending on the timing and extent of any policy changes. In the meantime, market participants continue to focus on earnings reports as a key indicator of corporate performance and the overall health of the economy.
Overall, the market remains optimistic despite recent economic data showing a slowdown in growth and rising inflation rates. Strong earnings reports from companies like Alphabet and Microsoft have helped boost investor confidence and market futures. With a positive week of gains in sight and continued focus on corporate earnings, investors are hopeful for continued market growth in the coming weeks.
