Five things you need to know before the market opens on Wednesday, January 25:
1. — Equity futures lower as earnings are below average
US stock futures fell on Wednesday as the dollar saw some gains against its global counterparts and government bond yields fell as markets react to a disappointing corporate earnings season.
Microsoft’s softer-than-expected earnings forecast, which clouded an otherwise solid December quarterly earnings, following muted updates in the industrial, tech and consumer sectors on Tuesday, and it looks like bullish sentiment will remain in check ahead of another set of earnings reports for Microsoft. and after the bell.
Boeing, AT&T, Abbott Labs (ABBOT) – Get a free report and Freeport-McMoran (FCX) – Get a free report will report earnings this morning, with Tesla and IBM (IBM) – Get a free report expected after the closing bell.
Prior to the start of the week, analysts had forecast collective S&P 500 earnings to fall 2.9% year-over-year to a stock-weighted $443.4 billion before recording a modest 0.1% increase. record over the three months ending in March.
That calculation could change, however, as more and more companies cite economic uncertainty, continued inflation and declining consumer spending as headwinds to their near-term earnings forecasts.
To sum up, government bond yields are trading markedly lower heading into the Wednesday session following the strongest 2-year bond auction in more than two years yesterday and concerns that the US could slide into recession in the first half of this year.
Benchmark yields on 10-year Treasuries were 4 basis points lower in overnight trading at 3.434%, while 2-year bonds fell to 4.148%. The US dollar index, which tracks the greenback against a basket of its global counterparts, was up 0.12% at 102.039.
Heading into the start of the trading day on Wall Street, futures linked to the S&P 500 are priced for an opening bell drop of 29 points, while those linked to the Dow Jones Industrial Average are set for a drop of 180 points. The tech-focused Nasdaq was down 120 points.
In overseas markets, Europe’s Stoxx 600 fell 0.28% during a mixed quarterly earnings season in December and economic activity data showing business sentiment in Germany, the region’s largest economy, picked up momentum throughout January.
In Asia, the region-wide MSCI ex-Japan index reached a new seven-month high in early trading, though markets in China remain closed for the celebration of the Lunar New Year. Japan’s Nikkei 225 gained 0.35%.
2. — Microsoft collapses as Cloud Outlook offsets Q2 gains
Microsoft (MSFT) – Get a free report Shares fell lower in premarket trading after the tech giant’s near-term outlook wiped out a better-than-expected December quarterly earnings report.
Shares even fell in after-hours trading as the group forecast current quarterly revenue for its intelligent cloud division of between $21.7 billion and $22 billion, a tally that missed Refinitv’s forecasts.
For the December quarter, Microsoft said revenue for Azure, its flagship cloud division, was up 31% year-over-year, ahead of Street forecasts but slowing from previous gains in the mid-to-high 40 percent range. , as companies continue to pull back on digital infrastructure spending and the dollar continued its climb into 2022.
Microsoft’s bottom fell 12% to $16.4 billion, while adjusted earnings fell 6.5% from last year to $2.32 per share, just above the Street consensus forecast of $2.30 per share. part.
Microsoft shares were marked down 1.67% in pre-market trading to indicate an opening bell price of $238.01 apiece.
3. — Tesla earnings on deck with price cuts, margins in focus
Tesla (TSLA) – Get a free report Shares fell lower in premarket trading ahead of the automaker’s long-anticipated clean energy gains in the fourth quarter after the closing bell.
Analysts will be watching a host of issues likely to weigh on both revenue and earnings for the three months ending December, with price cuts in key markets expected to weigh on profit margins and declining demand likely to dampen overall revenue growth .
Tesla is expected to post adjusted earnings of $1.13 per share for the quarter, up 33% from the same period last year, on revenues of $24.03 billion. However, the 35% advance would mark the lowest annual sales growth in more than two years.
Tesla delivered a record 405,278 new cars during the three months ending December, up 31.5% from the same period last year, with deliveries in 2022 pegged at 1,313,851, up 40% from the year before. 2021 levels, but well behind CEO Elon Musk’s promise of 50% growth rates.
Tesla shares were marked down 1.3% in pre-market trading to indicate an opening bell price of $141.86 apiece.
4. — Boeing returns to profit as orders pick up, China reopens
Boeing (BA) – Get a free report shares rose higher ahead of the aircraft maker’s earnings in the fourth quarter leading up to the opening bell
Boeing is expected to post an adjusted core of 26 cents per share for the three months ending December, up from the massive loss of $7.69 per share it reported last year — thanks in part to a $3 charge. 5 billion related to delays in the production and delivery of its 787 widebody — with sales of $30.38 billion.
The aircraft maker’s order book is also likely to be in the spotlight, following a large order for its 787 Dreamliner from United Airlines UAL following approval from the Federal Aviation Administration to resume deliveries following an investigation into safety inspection concerns.
Boeing delivered 480 aircraft last year, a 41% increase from 2021, while winning orders for at least 774 new jets, a number that still lags market leader Airbus. Boeing’s order backlog amounted to 4,578 aircraft.
Boeing shares were marked up 0.1% in pre-market trading to indicate an opening bell price of $212.19 apiece.
5. — Rupert Murdoch pulls the plug on TSTIME-News Corp. merger
Billionaire Rupert Murdoch scrapped plans to buy TSTIME Corp (FOXA) – Get a free report and News Corp (NWS) – Get a free reportthe two media empires he runs with his son, after criticism from major shareholders.
Murdoch, 91, who co-owns TSTIME with his son Lachlan, said in October that the two media groups have formed “special committees” to “deeply evaluate a possible combination.” However, the major shareholders opposed the deal and forced the
The Murdoch Family Trust said it would only support the partnership if it was approved by a “majority vote of the shares held by unaffiliated voting shareholders”.
Murdoch said late Tuesday in a Securities and Exchange Commission filing that “he and Lachlan K. Murdoch have determined that a combination is not optimal for TSTIME and News Corp shareholders at this time.”
TSTIME shares were marked up 2.42% in pre-market trading to indicate an opening bell price of $31.14 apiece, while News Corp each gained 4.5% to $20.80.
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