Stock Index Futures Climb on Upbeat Big Tech Earnings, U.S. Inflation Data Looms

Oleksandr Pylypenko - Barchart - Fri Apr 26, 4:34AM CDT

June S&P 500 E-Mini futures (ESM24)are up +0.63%, and June Nasdaq 100 E-Mini futures (NQM24) are up +0.86% this morning as upbeat quarterly results from tech titans Alphabet and Microsoft boosted sentiment, while investors geared up for the release of the Fed’s preferred inflation gauge.

Alphabet (GOOGL) surged over +11% in pre-market trading after the Google parent reported Q1 results that easily topped analysts’ expectations, declared its first-ever dividend of $0.20 per share, and announced an additional $70 billion buyback. Also, Microsoft (MSFT) climbed more than +3% in pre-market trading after the tech giant reported stronger-than-expected Q3 results.

In yesterday’s trading session, Wall Street’s major indexes closed in the red. Meta Platforms (META) plunged over -10% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the Facebook parent provided lighter-than-expected Q2 revenue guidance and increased its annual capital expenditures forecast. Also, Textron (TXT) slumped more than -9% after the conglomerate posted downbeat Q1 results. In addition, International Business Machines (IBM) slid over -8% and was the top percentage loser on the Dow after the tech giant reported weaker-than-expected Q1 revenue and confirmed its deal to acquire HashiCorp for $35 a share in cash. On the bullish side, Newmont (NEM) surged more than +12% and was the top percentage gainer on the S&P 500 after the company topped quarterly profit estimates and disclosed plans to divest non-core assets and trim its workforce.

The U.S. Department of Commerce’s preliminary reading on Thursday showed that the U.S. economy grew at a +1.6% annualized rate in the first quarter, weaker than expectations of +2.5%. At the same time, the U.S. Q1 core personal consumption expenditures price index picked up +3.7%, stronger than expectations of +3.4%. Also, U.S. pending home sales climbed +3.4% m/m in March, stronger than expectations of +0.3% m/m. Finally, the number of Americans filing for initial jobless claims in the past week fell -5K to a 2-month low of 207K, stronger than expectations of 214K.

“[The GDP] report was the worst of both worlds: economic growth is slowing, and inflationary pressures are persisting. The Fed wants to see inflation start coming down in a persistent manner, but the market wants to see economic growth and corporate profits increasing,” said Chris Zaccarelli at Independent Advisor Alliance.

Meanwhile, U.S. rate futures have priced in a 2.9% chance of a 25 basis point rate cut at May’s policy meeting and an 11.3% chance of a 25 basis point rate cut at the June FOMC meeting.

On the earnings front, notable companies like Exxon Mobil (XOM), Abbvie (ABBV), Chevron (CVX), and Colgate-Palmolive (CL) are set to report their quarterly figures today.

Today, all eyes are focused on the U.S. core personal consumption expenditures price index, the Fed’s preferred inflation gauge, in a couple of hours. Economists, on average, forecast that the core PCE price index will come in at +0.3% m/m and +2.6% y/y in March, compared to the previous values of +0.3% m/m and +2.8% y/y.

Also, investors will likely focus on the U.S. Michigan Consumer Sentiment Index, which arrived at 79.4 in March. Economists foresee the April figure to be 77.8.

U.S. Personal Spending data will be reported today as well. Economists foresee this figure to stand at +0.6% m/m in March, compared to the previous number of +0.8% m/m.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.689%, down -0.40%.

The Euro Stoxx 50 futures are up +0.75% this morning as investors cheered blockbuster earnings from Microsoft and Alphabet. Technology and construction stocks led the gains on Friday. A survey showed on Friday that French consumer confidence slipped slightly in April from March. Meanwhile, findings from the German Economic Institute revealed that Germany’s economic weakness is beginning to impact the labor market. In corporate news, Thyssenkrupp Ag (TKA.D.DX) surged over +11% after EP Corporate Group, led by Czech billionaire Daniel Kretinsky, agreed to acquire a 20% stake in the troubled steel division of the German company. Also, Amundi (AMUN.FP) climbed more than +6% after Europe’s biggest fund manager reported stronger-than-expected Q1 net inflows. In addition, Natwest Group Plc (NWG.LN) rose over +4% after topping Q1 earnings estimates.

France’s Consumer Confidence data was released today.

The French April Consumer Confidence stood at 90, weaker than expectations of 92.

Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +1.17%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.81%.

China’s Shanghai Composite Index closed higher today. Financial services stocks outperformed on Friday following an announcement by the State Council, the highest policymaking body in the country, stating its intention to promote the strengthening of leading securities firms. Meanwhile, China’s top legislature passed on Friday the Tariff Law, which will take effect starting December 1st. The law details various legal aspects concerning tariffs on Chinese imports and exports, ranging from tax incentives to China’s authority to retaliate against nations failing to honor trade agreements. In other news, Beijing city authorities have announced subsidies for companies that buy domestically manufactured artificial intelligence chips. Foreign investors purchased a net 22.4 billion yuan ($3.09 billion) worth of onshore Chinese shares through the northbound trading link on Friday. In corporate news, CNOOC climbed over +3% in Hong Kong after China’s biggest offshore oil producer reported a 24% year-on-year increase in Q1 earnings. Also, BYD gained about +5% after the EV maker bought back $27.6 million worth of shares on Thursday.

Japan’s Nikkei 225 Stock Index closed higher today after the Bank of Japan kept its interest-rate target unchanged. Real estate, technology, and healthcare stocks led the gains on Friday. Data from the Statistics of Japan showed on Friday that core inflation in Japan’s capital decelerated for the second consecutive month in April, hitting its lowest level since March 2022. Meanwhile, the yen reversed initial gains to reach a new 34-year low versus the dollar on Friday following the BOJ decision. As widely anticipated, the BOJ on Friday maintained the range for its benchmark rate between 0% and 0.1% at the conclusion of its meeting. In its quarterly outlook released Friday, the BOJ projected that inflation will stay at or near its target through fiscal 2026, with inflation at 2.8% for this fiscal year. Also, the BOJ noted that the real gross domestic product growth for 2024 is anticipated to be slower than initially projected, primarily due to decreased private consumption. In corporate news, Shin-Etsu Chemical plunged over -6% after the silicon producer said it would offer a substantial premium in its takeover bid for Mimasu Semiconductor Industry. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -2.98% to 20.82.

The Japanese April Tokyo Core CPI came in at +1.6% y/y, weaker than expectations of +2.2% y/y.

Pre-Market U.S. Stock Movers

Microsoft (MSFT) climbed more than +3% in pre-market trading after the tech giant reported stronger-than-expected Q3 results.

Snap (SNAP) soared about +24% in pre-market trading after the Snapchat owner posted upbeat Q1 results and provided above-consensus Q2 revenue guidance.

Intel (INTC) slumped over -6% in pre-market trading after the biggest maker of personal computer processors issued weaker-than-expected Q2 guidance.

Dow (DOW) gained about +1% in pre-market trading after JPMorgan upgraded the stock to Overweight from Neutral with a $61 price target.

Spotify (SPOT) rose more than +2% in pre-market trading after Phillip Securities upgraded the stock to Buy from Accumulate with a price target of $340.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - April 26th

Exxon Mobil (XOM), Chevron (CVX), AbbVie (ABBV), HCA (HCA), Colgate-Palmolive (CL), Natwest Group (NWG), Aon (AON), Roper Technologies (ROP), Charter Communications (CHTR), Fomento Economico Mexicano (FMX), Centene (CNC), LyondellBasell Industries (LYB), T Rowe (TROW), Ball (BALL), Avantor (AVTR), Saia (SAIA), Autoliv (ALV), Gentex (GNTX), AutoNation (AN), Trinet Grou (TNET), Moog (MOGa), Piper Sandler (PIPR), Sensient Technologies (SXT), Newell Brands (NWL), First Hawaiian (FHB), Carter’s (CRI), Barnes (B), Virtus (VRTS), WisdomTree (WT), U.S. Silica (SLCA), GrafTech (EAF), Civeo (CVEO), Oil States (OIS).

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On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.