Microsoft, Meta Platforms Drag Down Nasdaq Futures: Markets Wrap

(Bloomberg) — Stocks extended declines on the busiest day of the earnings season as investors digested results from Microsoft Corp. and Meta Platforms Inc. as well as economic data that blurred the picture for Federal Reserve interest-rate cuts.

Nasdaq 100 contracts retreated more than 1% before paring the drop, with Microsoft and Meta both down as much as 4% in pre-market trading. The slide in the two stocks combined represented roughly half of the losses in the Nasdaq futures, according to Bloomberg calculations. Amazon.com Inc. and Apple Inc. are due to report today.

Data on prices, personal spending and unemployment claims Thursday did little to clarify views on the Fed’s policy path, following robust economic-growth numbers yesterday that prompted traders to trim bets on interest-rate cuts.

The “disappointing” set of results from Microsoft and Meta was hurting sentiment, said Marija Veitmane, a senior multi-asset strategist at State Street Global Markets. Investors are questioning whether the companies can sustain profit growth while ramping up spending on artificial intelligence and cloud services.

“The market is concerned with the continued increase in investments, and that is likely to weigh on stocks in the short term,” she said. “In the medium term, however, we still see weakness in tech stocks as a buying opportunity. It’s a very crowded position, so it is getting sold on any sign of disappointment, but we always see investors coming back as there’s no other alternative if you want quality.”

Among other premarket stock movers, Uber Technologies Inc. slumped following a muted holiday forecast for the ride-hail service. Estee Lauder Cos. Inc. tumbled 18% after the cosmetics maker pulled its guidance for the year. EBay Inc. dropped after missing revenue forecasts. Comcast Corp. jumped after a profit beat.

The dollar slipped, though it remains on pace for its best month in more than two years. One-week implied volatility on the Bloomberg Dollar Spot Index rose to the highest since December 2022, indicating that traders expect wild swings in the greenback over the US presidential election.

“Yesterday’s US GDP data once more evidenced the continued ‘US exceptionalism’ theme which still underpins much of the USD’s recent strength,” said Michael Brown, a senior research strategist at Pepperstone Group Ltd. “I still find it tough to bet against the greenback in such an environment, and would be buying any pre-election USD dips.”

Treasuries were steady, with the two-year Treasury yield, which is most sensitive to interest-rate moves, hovering around a three-month high. In addition to the resilient US economy, investors are worried that a resurgence in inflation after the US election may delay or prevent interest-rate cuts.

“Who becomes president changes the perspective of the investment cycle,” Daniel Yoo, head of asset allocation, Yuanta Securities, said on Bloomberg Television, highlighting the potential effects of higher tariffs and lower corporate taxes under a potential Donald Trump presidency. “That will probably accelerate the process of inflation pressure and therefore the lowering of interest rates may be taken at a slower pace or not even happen.”

European Banks

The Stoxx Europe 600 retreated for a third day, on track for its biggest monthly decline in a year. French lender BNP Paribas SA was the biggest drag on the index, plunging more than 7% after reporting third-quarter earnings. Peers BBVA SA, Banco Sabadell SA and ING Groep NV also dropped after their results. Societe Generale SA stood out among lenders, soaring 11% after beating estimates.

European bonds dipped after data showed euro-area inflation accelerated more than expected in October — matching the European Central Bank’s target and boosting arguments for interest rates to be lowered gradually.

Meanwhile, UK bonds fell as the market priced in tighter monetary policy in response to the new government’s plans for vast borrowing and fiscal stimulus over the coming years.

Shares in Japan, Australia and South Korea declined, weighing on an index of the region’s equities, which headed for its worst monthly performance since August 2023. Mainland Chinese shares were mixed and those in Hong Kong rose, after a report showing monthly Chinese manufacturing data registered its first expansionary reading since April. 

The BOJ kept its benchmark interest rate unchanged after uncertainties increased over the outlook of the economy and the stability of the government after the ruling coalition suffered its worst electoral result since 2009. The yen strengthened below 153 per dollar.

Oil edged higher, extending its gains from the previous session. Gold declined after touching a fresh record in the prior session. Demand for the precious metal was partly supported by the uncertainty posed by next week’s vote.

Key events this week:

• Amazon, Apple earnings, Thursday
• China Caixin manufacturing PMI, Friday
• US employment, ISM manufacturing, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.6% as of 8:34 a.m. New York time
• Nasdaq 100 futures fell 0.7%
• Futures on the Dow Jones Industrial Average fell 0.4%
• The Stoxx Europe 600 fell 0.9%
• The MSCI World Index fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.2% to $1.0880
• The British pound rose 0.1% to $1.2978
• The Japanese yen rose 0.5% to 152.64 per dollar

Cryptocurrencies

• Bitcoin fell 0.9% to $72,212.01
• Ether fell 1.5% to $2,637.35

Bonds

• The yield on 10-year Treasuries declined one basis point to 4.29%
• Germany’s 10-year yield advanced two basis points to 2.41%
• Britain’s 10-year yield advanced eight basis points to 4.43%

Commodities

• West Texas Intermediate crude rose 0.9% to $69.25 a barrel
• Spot gold fell 0.4% to $2,777.16 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Chiranjivi Chakraborty, Richard Henderson and Jan-Patrick Barnert.

©2024 Bloomberg L.P.