Stock futures fell in overnight trading on Tuesday.
Futures on the Dow Jones Industrial Average futures slipped 106 points, the Nasdaq 100 shed 0.8% and S&P 500 futures fell 0.5%.
Shares of Microsoft dropped about 1%, reversing earlier gains in after-hours trading. Initially shares rose after the tech giant posted fiscal second quarter per-share earnings that exceeded analysts’ estimates. However, shares declined after the company offered lackluster guidance on its earnings call.
Investors are bracing for more high-profile corporate earnings amid fears of a recession. So far, more than 70 S&P 500 companies have reported fourth-quarter earnings, and 65% of them posted stronger-than-expected results, according to Refinitiv.
“With the bulk of earnings still in front of the market, the question as to whether the shift towards growth being signaled by recent rallies is warranted could be answered by upside earnings surprises and solid guidance,” said Quincy Krosby, chief global strategist at LPL Financial.
Tesla, Boeing, IBM and AT&T are among the companies slated to post numbers on Wednesday.
The overnight action followed a three-day winning streak for the blue-chip Dow. All three major averages are up at least 1% week to date.
4 HOURS AGO
Microsoft shares shed after-hours gains, turn negative
Microsoft shares slid about 1% in after-hours trading, reversing earlier gains.
Shares were initially higher after the company posted quarterly earnings per share that beat the Street’s expectations. However, investors’ sentiment soured after Microsoft issued disappointing guidance for revenue in the current quarter on its earnings conference call.
The company forecasted $50.5 billion to $51.5 billion in fiscal third quarter revenue, while analysts surveyed by Refinitiv anticipated $52.43 billion.
Read more about Microsoft’s results here.
–Darla Mercado, Jordan Novet
Morgan Stanley’s Mike Wilson expects earnings will start to roll over on weaker consumer
Morgan Stanley’s Mike Wilson said investors should brace for tougher times ahead.
“The numbers are actually going to finally come down in a way that we didn’t think would happen in Q4, which it didn’t, but now, we think that’s happening,” Wilson said Tuesday on CNBC’s “Closing Bell: Overtime.”
The investment strategist said he expects earnings will start to roll over as companies deal with a weakening consumer.
Still, he’s open to changing his outlook if he does not see a “more meaningful” drawdown in the next three or four months, or by April.
“We will probably back off our call, … because we’re still in a world of somewhat of financial repression, and bonds are not a great alternative necessarily longer term, and stocks are kind of the only game in town in a higher inflationary environment,” he said. “We’re not willing to make that call today because we think the risk reward is out of whack.”
— Sarah Min
5 HOURS AGO
Microsoft shares rise after earnings results show resilience in cloud
Shares of Microsoft led the gains in after-hours trading, up more than 4% after its quarterly results came in above estimates on top and bottom lines. The stronger-than-expected report was driven by the strong growth in its cloud unit.
Revenue in Microsoft’s Intelligent Cloud segment amounted to $21.51 billion, up 18%. Meanwhile, sales from Azure and other cloud services, which Microsoft does not report in dollars, grew by 31%.
— Yun Li