Stock futures rose in overnight trading Thursday, fueled by strong earnings results from Big Tech names Alphabet and Microsoft. Futures on the Dow Jones Industrial Average, S&P 500, and Nasdaq 100 all saw gains, with Alphabet’s shares soaring about 15% in extended trading after reporting better-than-expected first-quarter earnings. In addition, the company announced its first-ever dividend and a $70 billion buyback. Microsoft also saw its shares climb 5% following the release of fiscal third-quarter results that beat Wall Street’s expectations. The strength in these megacap stocks is expected to give the major averages a boost after a day of losses on Wall Street.
Thursday’s sell-off was triggered by new U.S. economic data that indicated a sharp slowdown in growth and persistent inflation issues. The GDP for the first quarter expanded by 1.6%, below the Dow Jones forecast of 2.4%, while the personal consumption expenditures price index rose at a pace of 3.4%, well above the previous quarter’s increase. Despite concerns over inflation running above target, the Federal Reserve may slow the pace of balance sheet runoffs at upcoming meetings but wait until September to start reducing interest rates. Nonetheless, major averages are still on track for a winning week, with the S&P 500 up 1.6%, the Nasdaq gaining more than 2%, and the Dow rising by 0.3%.
About 38% of S&P 500 companies have reported earnings so far, with nearly 80% surpassing expectations. Investors are eagerly anticipating more earnings reports, particularly from big energy firms Chevron and Exxon Mobil scheduled to be released before the bell on Friday. The positive earnings results from companies like Alphabet and Microsoft have contributed to the overall market optimism, despite concerns around economic data and inflation. This trend of beating earnings expectations has helped to boost investor confidence and drive the market higher.
The strong performance of Alphabet and Microsoft in the first quarter has reinforced the dominance of Big Tech in the market, with these companies playing a significant role in driving the overall market direction. With strong revenue growth and innovative products and services, these tech giants continue to attract investors looking for growth opportunities. The positive momentum from companies like Alphabet and Microsoft could help offset some of the concerns related to economic data and inflation, providing support for the overall market.
The Federal Reserve’s response to the latest economic data and inflation concerns will be closely watched by investors, as any changes in monetary policy could have significant implications for the market. With the Fed likely to take a cautious approach to managing inflation and interest rates, investors are preparing for potential shifts in market dynamics. The focus on earnings reports from key companies like Chevron and Exxon Mobil will also provide further insights into the overall health of the economy and specific sectors, shaping investor sentiment in the weeks ahead.
Overall, the current market environment is characterized by a mix of optimism and caution, with investors closely monitoring economic data, earnings reports, and Federal Reserve policy decisions. The strong performance of companies like Alphabet and Microsoft has provided a positive backdrop for the market, helping to offset concerns around growth and inflation. As earnings season continues and key economic indicators are released, investors will be looking for signals of sustained growth and stability, positioning themselves accordingly to capitalize on emerging opportunities and navigate potential risks in the market.
