US Stock Futures Fall, Meta’s Weak Guidance Spooks Tech Sector
US stock index futures experienced a decline on Wednesday evening, particularly in the technology sector, due to renewed weakness in heavyweight stocks. This occurred after Meta Platforms Inc. (META), the parent company of Facebook, released disappointing second-quarter guidance. Meta’s guidance raised concerns about increased spending on artificial intelligence (AI), potentially offsetting earnings growth from the technology sector. The company’s guidance overshadowed stronger-than-expected first-quarter earnings and set a negative tone for upcoming earnings reports from major technology peers like Microsoft Corporation (MSFT) and Alphabet Inc. (GOOGL). As a result, Microsoft and Alphabet’s stock prices fell approximately 2% and 3%, respectively, in aftermarket trading.
Wall St Rebound Cut Short as Rate Jitters Persist
A middling session on Wednesday for Wall Street indexes saw a rebound from near three-month lows cut short by persistent concerns about higher interest rates for an extended period. The S&P 500 showed a marginal increase to 5,071.63 points, while the NASDAQ Composite closed with a 0.1% gain at 15,712.75 points. However, the Dow Jones Industrial Average declined 0.1% to 38,460.92 points. The second quarter had initially started negatively for Wall Street indexes, with losses intensifying last week due to indications of high inflation and hawkish comments from the Federal Reserve. This led traders to largely rule out expectations of an interest rate cut in June.
Focus on Upcoming Economic Data
This week’s focus shifted to the upcoming release of gross domestic product (GDP) data on Thursday and the PCE price index data on Friday. Both readings are anticipated to influence the outlook for US interest rates. Treasury yields rose in anticipation of these readings, putting pressure on stock markets. Disappointing earnings reports from companies like United Parcel Service Inc. (UPS) and JetBlue Airways Corp. (JBLU) also contributed to the negative sentiment, as both companies reported weak revenue and disappointing outlooks.
Social Media Stocks, IBM Fall in Aftermarket Trade
Social media stocks such as Snap Inc. (SNAP) and Pinterest Inc. (PINS) experienced declines of 4% to 6% in aftermarket trading, reflecting Meta’s decline. IBM (IBM) saw an 8.3% drop due to weak first-quarter earnings, while the company also announced a $6.4 billion acquisition deal for Hashicorp Inc. (HCP). In contrast, Ford Motor Company (F) rose 1.7% on the back of strong first-quarter earnings and positive guidance. Chipotle Mexican Grill Inc. (CMG) gained over 3% after exceeding expectations with its first-quarter earnings.
