Following a rough day in the market where major indices saw losses early on Thursday but managed to recover late in the day, markets are poised for a strong open on Friday. The S&P 500 dropped 0.5% and the Nasdaq Composite lost 0.6% on Thursday, with the drop being attributed to earnings reports from Meta Platforms and IBM. Meta Platforms saw its shares fall 10% while IBM was down more than 8% for the day. However, positive earnings reports after the close and good economic news in the form of the Personal Consumption Expenditures (PCE) Index are expected to help markets have a good start on Friday.
After the close on Thursday, Google parent Alphabet and Microsoft reported better than expected earnings and provided optimistic outlooks. Google also announced a $0.20 dividend, while Microsoft revealed that Artificial Intelligence (AI) now makes up 7% of their Azure growth, up from 6%. Snapchat also had a positive earnings report, sending its shares higher by 27%. Colgate Palmolive beat on first-quarter earnings and raised guidance, causing its shares to rise over 2.5% in premarket trading. On the other hand, Intel reported better than expected earnings but issued a disappointing forecast, leading to an over 8% drop in its shares in premarket trading. Exxon Mobil and Chevron saw their shares fall due to falling margins in the refining business and low natural gas prices.
The positive earnings news so far is crucial in offsetting any fears of a rate cut in the near future. The PCE report showed core prices increased 0.3% on a month-over-month basis, in line with forecasts, but year-over-year core prices were up 2.8% versus expectations of 2.6%. Despite the slight increase, these numbers remain below 3%, which is seen as a tipping point for inflationary fears and rate hikes. This healthy environment of economic growth with inflation in check is favorable for earnings growth. Moving forward, it will be important to see if premarket gains can be held as it would indicate that the bears have lost their grip from earlier in the week.
Looking ahead, investors will be keeping an eye on big names like Amazon and Apple, set to report earnings next week, along with a number of economic data points. The upcoming employment report next Friday will also be a highlight on the economic calendar. It is advised to stick with investing plans and long-term objectives amid the ongoing market volatility. The content presented by tastytrade, Inc. is for educational purposes only and is not intended to provide trading or investment advice.
