US equity futures slumped after earnings from tech giants fell short of Wall Street’s high expectations and as investors prepared for the first interest-rate decision of the year from the Federal Reserve.
Contracts on the Nasdaq 100 slid 1.2%, while those on the S&P 500 retreated 0.5%. Microsoft Corp, Alphabet Inc and Advanced Micro Devices Inc dropped in premarket trading after their updates failed to match the recent hype around tech megacaps and artificial intelligence. Paramount Global soared 21% after Bloomberg reported that media mogul Byron Allen made a $14.3 billion offer for the media and entertainment company.
It’s a busy day of earnings in Europe too: Novo Nordisk A/S became only the second European company to reach a market value of $500 billion after it said sales and profit will surge again this year thanks to its blockbuster obesity shot Wegovy. Shares in Hennes & Mauritz AB plunged 10% after the retailer missed profit estimates and its chief executive officer stepped down. Europe’s Stoxx 600 index gained 0.3%.
Attention turns later to the Fed, with the Federal Open Market Committee poised to keep rates in a range of 5.25% to 5.5%, a 22-year high first reached in July. The rate decision and accompanying statement will be released in Washington, with Chair Jerome Powell holding a press conference 30 minutes later.
Traders see a roughly 40% chance the central bank will lower rates for the first time in March, but most Fed officials have said it’s too soon to speculate on such a pivot.
While Powell may say that recent declines in inflation are encouraging, he may still show little urgency to ease, given resilience in the labor market and growth in the economy.
“Even if it’s not our scenario, we expect the Fed to keep the door open for a possible rate cut in March, without sending a firm and definitive signal,” said Alexandre Hezez, chief investment officer at Group Richelieu in Paris.