by TYLER DURDEN at zerohedge.com
US equity futures fell on Tuesday, as investors braced for the first earnings from the megatech giant “generals”, which incidentally are mostly lower premarket; bond yields are 3-5bp higher and the USD is higher.
Contracts on the S&P 500 and Nasdaq 100 both fell 0.5% in New York as of 7:45 a.m. after Wall Street benchmarks ended Monday’s session broadly unchanged. Commodities are mixed with weaker oil after several days of gains. Yesterday, FRC reported after the bell with deposits declining 41% QoQ vs. -9% survey; stock is down 21% after close. Today, the focal point will be GOOGL and MSFT’s earnings after-market: investors will look for cost outlook and revenue growth. GOOGL closed +0.5% yday and +20.1% YTD; the implied move is 4.6%; MSFT closed -1.4% yday and up 17.5% YTD pre-market; the implied move is 3.3%. Further, keep an eye on the April Conference Board Consumer Confidence and Richmond Fed survey data.
In premarket trading, Alphabet and Microsoft are slightly lower ahead of their results after the market close today. Weighing on the sentiment were shares of US regional lenders, which dropped as much as 22% in premarket trading, after peer First Republic reported a slump in deposits that was worse than expected, sparking worries that the bank is still contending with challenges. Other US regional lenders fall too: PacWest Bancorp -2.2%, Western Alliance Bancorp -2.5%. Other results were mixed, with General Motors Co. and PepsiCo Inc. gaining after beats, while United Parcel Service Inc. sank as guidance disappointed. Here are some other premarket movers:
- Chinese stocks listed in the US fall, setting the Nasdaq Golden Dragon China Index up for its longest streak of losses in a year as geopolitical tensions dent risk appetite. Alibaba (BABA US) falls 1.4%, Baidu (BIDU US) -2.4%.
- Luminar Technologies rises as much as 5.9% as Jefferies initiated the company with a buy rating, saying it is best positioned to capture a dominant share of the nascent lidar market.
The first tech giant results due today will move markets: so far in 2023 the Nasdaq 100 has strongly outperformed the broader US market, rising about 19%, while the S&P 500 and the Dow Jones have added only 7.8% and 2.2% respectively. The tech-heavy index has posted the best start of the year since 2012 as investors bet that softer economic growth will lead the Federal Reserve to soften its hawkish stance.
Meanwhile, an earnings recession looms: profits for information technology companies in the S&P 500 are projected to fall 15% in the first quarter, which would be the biggest contraction year-over-year since 2009, according to data compiled by Bloomberg Intelligence. The largest tech-related companies have been the biggest contributors to the the S&P 500’s advance this year, by virtue of their size and outperformance. Apple, Microsoft and Nvidia alone account for nearly half of the index’s gains, according to data compiled by Bloomberg.