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US equity-index futures dropped after Microsoft Corp and Google’s parent Alphabet Inc delivered a mixed picture of big tech earnings.
Contracts on the Nasdaq 100 sank 0.6% and those on the S&P 500 were down 0.4%. Alphabet fell more than 7% in premarket trading after its cloud unit reported a smaller than expected profit. Microsoft, on the other hand, climbed after results in its cloud business beat expectations. Meanwhile, Texas Instruments Inc dropped after a disappointing revenue forecast suggested that demand remains sluggish for a broad range of electronic components.
With earnings season in full swing, investors are looking for evidence on how companies are coping with high interest rates and whether consumer spending is changing because of inflation. Meta Platforms, the parent company of Instagram and Facebook, was expected to report on Wednesday, with Amazon.com Inc due on Thursday.
“Tech earnings got off to a mixed start thanks to a focus on cloud computing, one of the big money spinners for the sector,” said Chris Beauchamp, chief market analyst at IG Group. “It’s now up to Meta tonight and Amazon tomorrow to provide the kind of good news that might give stocks a reason to rally into month-end.”
Europe’s stock benchmark was also weaker as earnings from some of the region’s biggest consumer-facing companies stoked concerns that a global economic slowdown is hurting corporate profits.
Kering SA slid after the Gucci owner reported a drop in sales amid a global slowdown in luxury, while home products company Reckitt Benckiser Group Plc fell after sales missed expectations. Worldline SA plunged more than 50%, the most ever, after the French payment company lowered its outlook for this year. Peer Nexi SpA slumped more than 10%.
The Treasury 10-year yield rose four basis points and a gauge of the dollar was steady. Elevated bond yields continue to weigh on appetite for equities, with major central banks set to hold policy rates high to bring down inflation.
“Rates will likely trade within recent ranges, but we do think that the latest US data provides some support to the higher-for-longer theme,” said Evelyne Gomez-Liechti, a strategist at Mizuho International.
Shares in Asia pushed higher after the government stepped up support for China’s economy and stock trading. The Hang Seng Tech Index gained 2.2%. Meanwhile, troubled Chinese developer Country Garden Holdings Co was deemed to be in default on a dollar bond for the first time.