U.S. stock index futures are lower on Wednesday on weak quarterly reports or forecasts from a number of big tech companies.
Shares of Alphabet Inc. (SPB: GOOG) and Microsoft Corp. (SPB: MSFT) shed 6.6% in pre-trading, while Texas Instruments (SPB: TXN) shed 4.7%.
Alphabet, Google’s holding company, saw its third-quarter 2022 revenue increase 6%, the slowest pace in two years, while its net income was down 27%. In addition, Google’s advertising revenue in the past quarter turned out to be worse than experts’ forecasts.
Microsoft recorded net profit and revenue better than analysts’ expectations in the first financial quarter ended September 30th. However, the company’s revenue forecast for the second financial quarter – $52.35-53.35 billion – turned out to be weaker than the market consensus forecast of $56.16 billion.
Texas Instruments gave a weak outlook for the current quarter, although its results in July-September exceeded analysts’ expectations.
“These companies’ reports are really important indicators of the advertising industry and a harbinger of the movement of goods and services in the economy,” said Fahad Kamal, chief investment officer of Kleinwort Hambros, quoted by Dow Jones.
Other tech companies due to release quarterly earnings this week include Meta (SPB: META) Platforms Inc. (recognized as an extremist organization in the Russian Federation and banned), Apple Inc. (SPB: AAPL), Intel Corp. (SPB: INTC) and Amazon.com Inc. (SPB: AMZN) Shares of these companies lost 4.3%, 1.1%, 1.2% and 3.6%, respectively, in early trading on Wednesday.
“We’re used to the tech sector performing strong quarter-on-quarter,” says FlowBank chief investment officer Esti Dweck. “There was hope that their financials would be another signal that the sector is still resilient.”
The value of Boeing Co. (SPB: BA) shed 0.8%. One of the world’s largest manufacturers of aviation, space and military equipment increased revenue in the third quarter by 4%, but the figure turned out to be almost $2 billion worse than the average market forecast. At the same time, Boeing’s free cash flow in July-September amounted to $2.9 billion, significantly exceeding the average analysts’ forecast of $1 billion.
The focus of traders on Wednesday – the data on sales of new buildings in the US in September, which will be released by the country’s Department of Commerce at 17:00 Moscow time.
Experts polled by Trading Economics, on average, expect sales to decline by 13.9% last month, to 585,000 homes.
The value of the December E-mini futures for the S&P 500 fell by 0.97% to 3832.75 points by 15:50 square meters on Wednesday. The quotation of the December E-mini futures on the Dow Jones index fell by this time by 0.36%, to 31,762 points. Futures on the Nasdaq 100 for December fell 1.97% to 11,483 points.
